250813.mbx

250813.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, August 13, 2025, Vol. 26, No. 161 Headlines G E R M A N Y ARAGON HOLDCO: S&P Cuts LT ICR to 'B-' on Delayed Deleveraging I T A L Y RENO DE MEDICI: Fitch Lowers LongTerm IDR to 'B-', Outlook Negative P O L A N D G CITY EUROPE: Moody's Affirms 'B3' CFR, Alters Outlook to Positive S P A I N FTA UCI 14: S&P Raises Class C Notes Rating to 'BB+ (sf)' GREEN BIDCO: S&P Cuts LT ICR to 'CCC+', Outlook Negative T U R K E Y LIMAK CEMENT: Fitch Affirms 'B+' Long-Term IDR, Outlook Stable U N I T E D K I N G D O M ARGENTEX FOREIGN: FRP Advisory Named as Joint Administrators CHESHIRE 2025-1: Fitch Assigns 'BB-(EXP)sf' Rating to Cl. F Notes CHESHIRE 2025-1: S&P Puts Prelim B+ (sf) Rating to Cl. F-Dfrd Notes EUROSAIL-UK 07-3: Fitch Lowers Rating on Class D1a Notes to 'B-sf' G.T.B. COMPONENTS: Forvis Mazars Named as Administrators GREENE KING: S&P Lowers Class B Notes Rating to 'BB (sf)' HUMBER SERVICES: Quantuma Advisory Named as Administrators LANDMARK MORTGAGE NO.2: Fitch Lowers Rating on Cl. D Notes to B+sf MATCH FINANCIAL: S&W Partners Named as Joint Administrators OPTIMAL COMPLIANCE: Quantuma Advisory Named as Administrators PAYME GROUP: Creditors' Meeting Set for Aug. 20 SLIM AT HOME: Quantuma Advisory Named as Administrators STONEGATE PUB: Fitch Cuts IDR to 'CCC+' on Lower Expected Earnings TALKTALK TELECOM: Fitch Lowers IDR to CCC- & Puts on Watch Negative VUE ENTERTAINMENT: Moody's Affirms 'Caa2' CFR, Outlook Now Stable - - - - - ============= G E R M A N Y ============= ARAGON HOLDCO: S&P Cuts LT ICR to 'B-' on Delayed Deleveraging -------------------------------------------------------------- S&P Global Ratings lowered its long-term issuer credit rating on medical-diagnostic services provider Aragon Holdco GmbH (amedes) to 'B-' from 'B'. At the same time, S&P lowered its issue rating on amedes' EUR820 million term loan B (TLB) to 'B-', with an unchanged recovery rating of '3' and recovery prospects of 50%-70% (rounded estimate: 55%). The stable outlook reflects S&P's expectation that amedes can increase both its top line and EBITDA, thanks to progressive signing of new key accounts and the completion of the turnaround program "Energize amedes." This will support progressive deleveraging toward 7.0x and positive cashflow generation in 2026. The downgrade reflects the material deviation in credit metrics S&P Global Ratings now expects in 2025, particularly on EBITDA and leverage. Despite a year-on-year increase in revenue in Germany and Belgium and in IVF-testing during the first quarter of 2025, revenue for the group stood at EUR162.4 million, 4.2% below budget. S&P said, "While we understand the volumes during the first quarter have been partially affected by an aggressive flu season, we note underperformance was also linked to unfavorable mix and internal delays linked to the delivery of the transformation program Energize amedes. We note that, during the last quarter of 2024 and the first quarter of 2025, the group faced some delays in the implementation of key strategy initiatives, notably some operational issues with the newly installed machinery in the Göttingen, Germany hub. We note that operational issues faced in Göttingen are linked to a general lack of integrated solutions in the market. We now expect top line to stand at EUR645 million-EUR655 million for 2025, only moderately down versus our previous base case of EUR655 million-EUR665 million. We understand amedes is currently in a transition phase, with the group focusing on the delivery of the Energize amedes program, expected to conclude in 2025. Despite a year-on-year progressive reduction in exceptional costs in 2025, we expect them to remain elevated at EUR25 million-EUR30 million, almost double what we included in our previous base case. The continued presence of exceptional costs, which we treat as operating and include in our definition of EBITDA, hampers the EBITDA generation for amedes. We expect S&P Global Ratings-adjusted EBITDA for 2025 to remain at EUR110 million-EUR120 million (18.0%-18.5% EBITDA margin), above the EUR82 million the company posted in 2024 but well below our previous expectation of EUR140 million-EUR150 million (21.5%-22.0% EBITDA margin). This leads to S&P Global Ratings-adjusted leverage remaining elevated at 9.0x-9.5x, down from 12.5x the company posted in 2024 but above our previous expectation of 7.0x." S&P said, "We anticipate S&P Global Ratings-adjusted debt to EBITDA will decline but remain elevated close to 7.0x in 2026. We expect strong deleveraging in 2026, yet we still see a high degree of execution risk--under our base case a deviation of 100 basis points on the EBITDA margin would imply S&P Global Ratings-adjusted leverage remaining above 7.0x in 2026. We anticipate the top line will increase by 8.0%-8.5%, primarily driven by the cytology division. Given the re-start of the three-year co-testing cycle for human papillomavirus (HPV) in Germany, we anticipate sales in cytology will increase by around 55%. We think it is also important the group successfully aligns the incentive of its salesforce to support a progressive improvement in mix. We note the group's net signings remain positive. The improvement in top line, coupled with the conclusion of the restructuring effort under the Energize amedes program, should translate in an expansion of S&P Global Ratings-adjusted EBITDA margins to 22.0%-22.5%. Yet, we remain cautious around the profitability developments, because over the past years the group has underperformed our base case and higher-than-envisioned restructuring costs have protractedly hampered profitability. Management has guided that 90% of the transformation program should be concluded by the end of 2025. However, we have seen in the past large turnaround initiatives lasting longer than anticipated. "We expect amedes ' liquidity buffer to improve, supported by expected EUR20 million-EUR30 million FOCF generation after leases in 2026. In our base case, we factor negative FOCF generation after leases in 2025, implying a thin free-cash-flow cushion. This marks a deviation from our previous expectations of EUR10 million-EUR55 million and is primarily driven by lower S&P Global Ratings-adjusted EBITDA and by higher-than-previously expected capital expenditure (capex). We understand some expansionary projects have been pushed into 2025 from 2024, and thus we anticipated capex will remain elevated at 8.0%-8.5% of sales, well above our previous assumption of 4.5%-5.0%. Considering around 75% of the EUR135 million revolving credit facility (RCF) is drawn as of March 31, 2025, we believe the group's liquidity will remain tight over the second half of 2025. We understand the group is working on the disposals of some noncore assets to support liquidity. The improvement in the company's FOCF generation will be supported by an expansion of the EBITDA base and a reduction in capex to EUR30 million-EUR40 million. We also anticipate the group will use cash on balance sheet to replenish the RCF in 2026, improving its liquidity buffer. Positively, we note there are no near-term refinancing risks as the EUR820 million TLB will mature in November 2028. "We anticipate amedes will focus on organic growth. We view as positive amedes' decision to temporarily pause its buy-and-build strategy to focus on the completion of the Energize amedes program and on the delivery of the program's cost synergies. In our base case for 2025, we only include cash outflows related to the earn-outs of previous mergers and acquisitions. We believe diligent execution of the final steps for the full implementation of Energize amedes are key for an improvement in the credit metrics. We acknowledge that the new management team intends to focus on commercial execution, aiming at signing new key accounts (notably hospital groups, care centers, ambulatory services, and diagnostic changes), and on service excellence. We note amedes' strategy to offset any potential pricing pressure is to have a well-functioning laboratory network, so that testing could be conducted in the most cost-efficient way. Overall, we believe amedes' owners exhibit a risk profile that is less aggressive than traditional private equity and positively view amedes' shareholders have been supportive of the group in the past, for example in the EUR80 million increase in the shareholder loan and the EUR40 million direct equity contribution in 2024. We have included a EUR5 million dividend payment in 2025, to reflect a cash outflow recorded as a dividend in the first quarter of 2025 and linked to top management changes. We do not anticipate a recurring dividend program. "The stable outlook reflects our expectation that amedes can increase both its top line and EBITDA, thanks to progressive gains in key accounts and the completion of the Energize amedes turnaround program, translating into higher volumes and a reduction of exceptional costs in 2025. "In turn, we forecast S&P Global Ratings-adjusted EBITDA improving to EUR150 million-EUR160 million in 2026, up from EUR110 million-EUR120 million in 2025. We expect S&P Global Ratings-adjusted debt to EBITDA to remain elevated at around 9.0x in 2025, before declining to around 7.0x in 2026. We also expect amedes to generate positive FOCF after lease payments in 2026. "We could lower the rating over the next 12 months if amedes' credit metrics and cashflow generation deteriorated materially compared with our base case, such that we could consider the capital structure unsustainable. This could arise from weaker-than-expected EBITDA due to, for example, operational headwinds, or higher-than-anticipated exceptional costs linked to the Energize amedes or any other restructuring programs. Any debt-funded acquisitions could also translate into credit metrics being lower than our base case." A positive rating action would require both the group's ability to display strong FOCF and debt to EBITDA staying sustainably below 7.0x. The group would achieve this following successful completion and execution of the Energize amedes transformation program. This would allow a structural improvement of the EBITDA base coupled with reduction of expansionary capex. ========= I T A L Y ========= RENO DE MEDICI: Fitch Lowers LongTerm IDR to 'B-', Outlook Negative ------------------------------------------------------------------- Fitch Ratings has downgraded Reno de Medici S.p.A.'s (RDM) Long-Term Issuer Default Rating (IDR) to 'B-' from 'B' and its senior secured notes to 'B-' from 'B'. The Outlook on the IDR is Negative. The Recovery Rating on the notes is 'RR4'. The downgrade reflects a material deterioration in EBITDA compared to its earlier projections, resulting in credit metrics falling outside their prior negative sensitivities. This is due primarily to softer pricing power stemming from a lack of direct cost pass-through in contracts and high recycled paper prices, despite improving volumes in 1Q25. While Fitch forecasts further demand recovery, coupled with increase in prices primarily in white lined chipboard (WLC), Fitch expects EBITDA growth to remain restrained in 2025-2026. The Negative Outlook reflects uncertainty around EBITDA recovery, driven by softer market conditions despite WLC price increases in 2Q25. This, together with interest on higher gross debt, will result in negative free cash flow (FCF) and higher leverage in 2025 and 2026. Key Rating Drivers High Leverage: Fitch forecasts RDM's EBITDA gross leverage at 13.0x at end-2025, and Fitch expects it to remain high within 8.0x-10.0x in 2026-2027. These revised metrics exceed its previous sensitivities for an extended period, with leverage expected to fall to 7.1x only by end-2028. The delay in deleveraging is attributed to weaker EBITDA generation stemming from RDM's limited ability to pass on input costs, higher recycled paper prices, lower volumes due to moderating demand and the company's strategy to shut down cost-ineffective plants. EBITDA Generation Constrained: Fitch projects RDM's EBITDA margin to remain depressed at 6.8% in 2025, before recovering to 8.5%-10.5% during 2026-2027, and to 11.5% by 2028. This will be supported by increasing capacity utilisation, improved pricing and cost-cutting initiatives. Nevertheless, this margin profile is below its previous expectations of 11%-13% for 2026-2027, leading to a variance of EUR30 million in annual EBITDA for 2025-2027, Consequently, this results in weaker FCF and higher EBITDA leverage. Eroded FCF Margins: Fitch projects negative FCF generation of EUR63 million and EUR26 million in 2025 and 2026, respectively, after worse-than-expected negative FCF in 2024 driven by lower EBITDA and higher debt costs, before turning neutral in 2027. Capex is expected to slow to 3.5%-3.8% of revenue from 2025 following the completion of the Blendecques capex. Fitch anticipates that improving EBITDA, limited capex and the absence of acquisitions and dividends, will lead to positive FCF from 2027. Limited Cost Pass-Through Ability: RDM operates with short-term purchase orders with yearly targets and incentive schemes but lacks the contractual cost pass-through mechanisms of long-term agreements of its peers. In 1H24, the company raised the price of WLC, due to higher recycled paper costs and demand recovery, before reversing the increase following a market share decline. Despite RDM's modest pricing power, customer retention is bolstered by long-term relationships and product quality, allowing a 4%-5% selling price rise in 2025 following an announcement of the increase in 1Q25. Moderate Business Profile: RDM's small size and limited geographical diversification constrain its rating. Packaging peers rated by Fitch are at least twice the size of RDM and have better pass-through ability. However, the company benefits from longstanding customer relationships, a strong market position as a leader in white and solid boards in Europe, resilient demand from the food and beverage markets (about half of RDM's revenue) and a supportive regulatory framework for recycled paper versus plastic packaging. Peer Analysis RDM is small in scale compared with other Fitch-rated packaging peers, such as Sappi Limited (BB+/Stable), CANPACK Group, Inc. (BB-/Positive), Ardagh Metal Packaging S.A. (B-/Rating Watch Evolving) and Fedrigoni S.p.A (B+/Negative). RDM's business profile is weaker than Fedrigoni's, due to its limited geographical diversification. RDM's forecast EBITDA margin of 6.8%-10.5% remains lower than Fedrigoni's 13%-14.5% but in line with Canpack's. This is due to its concentrated presence in the European packaging market, while the others have a presence in America and Asia. RDM's negative FCF margins in 2025 and 2026 are weaker than Fedrigoni's 2.5%-3% and Sappi's of over 2%. RDM's financial profile in 2025-2026 is weaker than Fedrigoni's, due to its higher expected leverage and weaker coverage ratios. Fitch forecasts RDM's gross leverage will fall to 7.1x by end-2028, weaker than Fedrigoni's below 6.0x at end-2026 and Ardagh Metal's 6.0x at end-2027 Key Assumptions Revenue to rise by 11% in 2025, 6% in 2026 and 2% in 2027, after a 4% decline in 2024 EBITDA margin to recover on pricing, operational improvement and cost-cutting initiatives of EUR40 million in 2025-2026, to 6.8% in 2025 and 8.5%-10.5% in 2026-2027, after a decline to 4.8% in 2024 Barcelona mill closed in July 2025 Working capital outflows across 2025-2027 due to an increase in factoring use and rise in revenue Capex to normalise at 3.3%-3.8% of sales from 2025, versus 6.3% in 2024, due to completed capex on the Blendecques mill No dividends or M&As to end-2028 Recovery Analysis Key Recovery Rating Assumptions - The recovery analysis assumes that RDM would be reorganised as a going concern (GC) in bankruptcy rather than liquidated. - Fitch assumes A 10% administrative claim. - RDM's super senior revolving credit facility (RCF) is fully drawn after restructuring and ranks ahead of senior secured debt. Factoring facilities backed by receivables also rank super senior. - Fitch's GC EBITDA estimate is EUR90 million, unchanged from its previous estimate, reflecting the sustainable, post-reorganisation EBITDA on which Fitch bases the valuation of the company. - An enterprise value multiple of 5.0x (revised from 5.5x) is applied to GC EBITDA to calculate a post-reorganisation valuation. It reflects RDM's leading position in European markets, long-term relationship with clients, well-invested production assets, and a 60%-70% exposure to resilient markets. This is in line with other packaging peers, like Ardagh and Fedrigoni. - Its debt structure comprises an increased EUR146.6 million (as of June 2025) super senior RCF (assumed fully drawn), EUR600 million senior secured notes, EUR41.4 million factoring (outstanding value at end-2024), which Fitch views as super senior, and EUR56 million of other debt. - Based on the above, its waterfall analysis generates a ranked recovery for the senior secured notes noteholders in the 'RR4' category, leading to a 'B' rating for the EUR600 million notes. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA gross leverage consistently above 8.0x - Negative FCF margins for an extended period and deteriorating liquidity position - EBITDA interest coverage below 1.5x on sustained basis from 2027 Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA gross leverage sustainably below 7.0x - Positive FCF margins on a sustained basis - EBITDA interest coverage sustainably above 2.0x Liquidity and Debt Structure Fitch expects RDM's liquidity for 2025 to mainly consist of c. EUR25 million cash and EUR60 million available under RCF facility as of June 2025, which are expected to cover its estimated of negative FCF of EUR63 million this year. Fitch estimates the proceeds from the disposal of closed plants assets at EUR60 million-70 million, but those are assumed to be available in 2026. RDM's financial flexibility deteriorated further in 1H25 but is sufficient to fund the forecast negative FCF in 2025 and 2026 of EUR26 million. The company has no major repayment obligations other than the EUR41.4 million factoring and EUR47.9 million other short-term loans at end-2025. Its debt structure is dominated by long-dated EUR600 million senior secured notes, which the company refinanced in April 2024, extending the maturity to April 2029. Issuer Profile RDM, founded in 1967 and headquartered in Milan, is a leading European producer and distributor of recycled paper board mainly for the packaging industry. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations RDM has an ESG Relevance Score of '4[+]' for Exposure to Social Impacts due to consumer preference shift from plastic to paper and cardboard packaging, which has a positive impact on the credit profile, and is relevant to the rating in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Reno de Medici S.p.A. LT IDR B- Downgrade B senior secured LT B- Downgrade RR4 B =========== P O L A N D =========== G CITY EUROPE: Moody's Affirms 'B3' CFR, Alters Outlook to Positive ------------------------------------------------------------------- Moody's Ratings has affirmed the B3 long-term corporate family rating of G City Europe Limited (G City Europe or the company). Concurrently, Moody's have affirmed the Caa2 rating on G City Europe's subordinate notes and the B3 rating of Atrium Finance PLC's (Atrium) backed senior unsecured euro medium term notes. The outlook on both entities has been changed to positive from stable. RATINGS RATIONALE RATIONALE FOR THE RATING OUTLOOK "The outlook change reflects an improvement of credit metrics based on the company's solid operating performance driven by robust rental income and the expectation of further improvements going forward" says Oliver Schmitt, Moody's Ratings Lead Analyst for G City Europe. "The action furthermore reflects improvements in liquidity, also considering easing shorter term concerns about the parent company's need for support by G City Europe and the expectation that refinancing activities will be proactively addressed", adds Mr. Schmitt. The rating affirmation follows an improved Moody's-adjusted debt/asset of 51.7% as of June 30, 2025 that Moody's expects to decline further. Although Moody's expects EBITDA/interest to trend lower from current 1.9x from refinancings and hybrid reset, the standalone financial metrics support a higher rating. Operating performance was strong in H1 2025 with 14% like-for-like NRI growth and high occupancy, which Moody's expects to moderate but to remain solid. At the same time, credit linkage to G City Europe's Israelian parent company remains material, exposing G City Europe to geopolitical and governance risk. G City Europe provided EUR190 million under a revolving credit facility and a vendor loan to its parent, and guarantees a EUR128 million loan of G City Ltd. with one of its assets as collateral. The positive outlook reflects the positive trend of leverage reduction that can meet the requirements for a B2, while Moody's will monitor further developments with respect to the asset performance, refinancing activities of G City Europe, and the linkage to and the credit quality of the parent within the outlook period. LIQUIDITY Moody's views G City Europe's liquidity position to be highly dependent on liquidity requirements of the broader group / the parent. Liquidity management is done on a group-wide level. G City Europe changed from being a receiver of support from the parent (in financial terms) to being a provider of support. On a standalone basis, liquidity is sufficient for the next 12 months outside of potential bond buybacks that the company has announced. The company will need to generate further liquidity to address its 2027 bond maturity. Moody's would expect the company to aim for more secured debt or to generate liquidity from disposals. Moody's estimates that G City Europe has above EUR500 million of unencumbered property assets that it can use for secured loans. G City Europe has also received an undertaking from its parent for a release of the Dominikanska pledge subject to certain conditions, which would add an above EUR200 million asset for funding or disposals. G City Europe has material receivables from its parents that may also serve as a source of funds. STRUCTURAL CONSIDERATIONS Secured loans provide for the majority class of debt, ranking ahead of senior unsecured debt and hybrid debt. The financial flexibility is declining with the expected encumbrance of further assets to generate liquidity. At this point Moody's continues to reflect the fact that the hybrid bonds provide subordination support to the senior unsecured notes, which results in the backed senior unsecured note rating being aligned with the CFR. Further asset encumbrance can nevertheless result in a downgrade of the backed senior unsecured note due to subordination. The Caa2 rating on the subordinated hybrid notes issued by G City Europe reflects the deeply subordinated nature of the hybrid notes. The subordinated hybrid notes no longer qualify for equity treatment under Moody's Hybrid Equity Credit methodology after the downgrade of G City Europe to a non-investment-grade company. The first reset date for the subordinate hybrid notes is in 2026. Moreover, G City Europe has access to a subordinated facility from G City Ltd., maturing in 2026. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade could occur if the refinancing risk and credit concerns with respect to G City Europe's parent remain stable, while maintaining Moody's-adjusted debt/total assets well below 60%. Given further unsecured maturities Moody's expects a mix of disposals and secured debt to provide funding well in advance and would expect a stable fixed charge cover above 1.5x. An upgrade would also require comfort about the parent's financial position and the exposure to geopolitical risk. Factors that could lead to a downgrade: -- Failure to secure further liquidity to address the 2027 bond maturity -- Further material cash payments or an increased exposure to the parent entity or a deterioration of credit quality of G City Ltd. -- Operational weakness in the company's retail assets -- Moody's-adjusted debt/total asset deteriorates above 60% -- Moody's-adjusted fixed charge cover drops below 1.3x The backed senior unsecured note rating may get notched down from the corporate family rating if the amount of unencumbered assets continue to shrink. The principal methodology used in these ratings was REITs and Other Commercial Real Estate Firms published in May 2025. PROFILE G City Europe owns a EUR1.5 billion portfolio of 9 retail assets and 3 residential assets as of June 2025. The company generated net rental income of EUR38.6 million during the first 6 months of 2024. The company is focused on the Government of Poland (A2 stable). G City Europe is a private subsidiary of G City Ltd., an Israel-listed property company. ========= S P A I N ========= FTA UCI 14: S&P Raises Class C Notes Rating to 'BB+ (sf)' --------------------------------------------------------- S&P Global Ratings raised its credit ratings on Fondo de Titulizacion de Activos UCI 14's class B to 'AA+ (sf)' from 'A+ (sf)' and class C notes to 'BB+ (sf)' from 'B (sf)' and removed the under criteria observation (UCO) identifier from the ratings. At the same time, S&P affirmed its 'AAA (sf)' rating on the class A notes. The rating actions reflect its full analysis of the most recent information S&P has received and the transaction's current structural features. S&P said, "The overall effect of applying our global RMBS criteria is a decrease in our expected losses due to reduced weighted-average foreclosure frequency (WAFF) and weighted-average loss severity (WALS) assumptions. The WAFF has decreased due to lower effective loan-to-value (LTV) ratios, higher seasoning, and proportionally fewer loans with performance agreements. In addition, our WALS assumptions decreased due to the updated market value decline assumptions and the lower current LTV ratio, while we kept the same valuation haircuts as in previous reviews. The valuation haircut reflects the actual data received from comparable asset sales, where we have seen a risk that property prices were overvalued at origination. "The share of loans underperforming agreements has reduced since our previous review. The combined figures stressed in our analysis, which consider restructuring loans or loans more than 90 days past due within the last five years together with performing agreements, are now down to 6.6% from 9.2% since our previous review. This reflects UCI's updated restructuring policy, as it now seeks long-term solutions for borrowers foreclosing or novating the securitized loan in multiple cases. In our analysis, given that these borrowers pay less compared with their original schedule, we increased our reperforming adjustment to 5.0x from 2.5x, as we consider these loans to introduce higher risk." Credit analysis results Rating WAFF (%) WALS (%) Credit coverage (%) AAA 32.37 2.29 0.74 AA 24.75 2.00 0.49 A 20.70 2.00 0.41 BBB 15.71 2.00 0.31 BB 10.10 2.00 0.20 B 8.63 2.00 0.17 WAFF--Weighted-average foreclosure frequency. WALS--Weighted-average loss severity. UCI 14's class A and B notes' credit enhancement has increased to 53.0% and 30.2% from 45.1% and 26.1%, respectively, since our previous review. This is due to the notes' amortization, which is sequential following the arrears trigger breach. This trigger also prevents the reserve fund from amortizing, which currently stands at its target level. The class C credit enhancement has decreased to 4.6% from 4.7%. Total arrears, as per the June 2025 investor report, have decreased to 6.5% from 9.3% since our previous review. Overall delinquencies are above our Spanish RMBS index. S&P said, "Our operational, rating above the sovereign and legal risk analyses remain unchanged since our previous review. Therefore, these criteria do not cap our ratings. According to our revised counterparty criteria, commingling risk is now fully mitigated because the collections are swept to the issuer's account bank within the next business day. Therefore, our revised counterparty criteria do not cap our ratings. "We raised to 'AA+ (sf)' from 'A+ (sf)' and to 'BB+ (sf)' from 'B (sf)' our ratings on the class B and C notes, respectively. The class B and C notes could withstand our cash flow stresses at higher rating levels. However, our assigned ratings also consider the transaction's historical performance, and the amount of restructured loans in the portfolio. We also considered the transaction's low pool factor, available credit enhancement, and potential tail-end risk. "We affirmed our 'AAA (sf)' rating on the class A notes. The notes' available credit enhancement remains commensurate with the assigned rating. "We consider the transaction's resilience in case of additional stresses to some key variables, in particular defaults and loss severity, to determine our forward-looking view. "In our view, the ability of the borrowers to repay their mortgage loans will be highly correlated to macroeconomic conditions, particularly the unemployment rate, consumer price inflation, and interest rates. Our forecasts for unemployment in Spain for 2025 and 2026 are 10.6% and 10.3%, respectively. "Furthermore, a decline in house prices typically affects the level of realized recoveries. For Spain in 2025 and 2026, we expect them to increase by 11.6% and 7.2%, respectively. "We ran additional scenarios with increased defaults of 1.1x and 1.3x and increased loss severity of 1.3x. Additionally, as a general downturn of the housing market may delay recoveries, we have also run extended recovery timings to understand the transaction's sensitivity to liquidity risk. The results of the above sensitivity analysis indicate no deterioration." UCI 14 is a Spanish RMBS transaction that closed in November 2005. It securitizes a portfolio of residential mortgage loans, which Union de Creditos Inmobiliarios and Establecimiento Financiero de Credito originated and service. GREEN BIDCO: S&P Cuts LT ICR to 'CCC+', Outlook Negative -------------------------------------------------------- S&P Global Ratings lowered its long-term issuer credit and issue ratings on Spain-based business-to-business (B2B) energy transition distributor Green Bidco S.A.U. (doing business as Amara) and its EUR265 million senior secured notes to 'CCC+' from 'B-'. S&P said, "The negative outlook reflects our view that ongoing challenging and uncertain market conditions in Amara's key product sectors and geographies could lead to a further weakening in operating performance and lead us to believe that the company is likely to default in the next 12 months without an unforeseen positive development." The downgrade reflects ongoing challenging end-market conditions for Amara that have led to materially weaker credit ratios. In 2024, revenue declined by 9% year-over-year, primarily due to ongoing weak trends in the solar segment, with declining prices for solar modules, and decreased demand in its core geographies (Spain, Italy, and Brazil) on the back of lower energy prices and a reduction in government subsidies. S&P Global Ratings-adjusted EBITDA was just EUR12 million in 2024 (compared to EUR41 million in 2023) due to the weak market conditions affecting Amara's key end-markets, as well as high exceptional costs (of close to EUR17 million). This was primarily related to restructuring activities that include the closure of recently opened geographies in Latin America, consultant expenses, and inventory clearance at lower prices. FOCF generation was significantly negative at negative EUR43 million due to the decline in EBITDA and the high interest burden of EUR36 million, despite working capital inflows of EUR6 million (net of factoring drawings). Therefore, debt leverage was extremely weak at 31.0x, with negative FFO and thin cash interest coverage of just 0.3x. S&P said, "We continue to anticipate that the challenging market situation, particularly in solar, will not significantly improve in the short term. While the solar industry for residential customers has benefited from low interest rates that support financing, government subsidies, and higher energy prices, this situation appears to have changed. We understand that demand for residential solar panels in Amara's key geographies remains subdued. We currently do not foresee any near-term improvements in demand in those geographies, whilst module prices are anticipated to remain broadly stable albeit at very low levels. In the U.S., where Amara started operating through SUNRGY in late 2023, we see some market opportunities due to the fragmented nature of a large addressable market. However, policy uncertainty over the Inflation Reduction Act's solar tax credit rate, which is set to expire at the end of 2025, makes it harder to see a clear growth trajectory. Therefore, we forecast only modest growth for Amara's solar segment of up to 3% per year until 2027." A more robust operating performance in the first half of 2025 reflects management's cost-saving initiatives. First-half 2025 low (2% year-on-year) revenue growth was primarily driven by growth (of 22%) in the smaller energy transition services segment, while renewables increased by about 2% (including 2% growth in the solar segment) and electrification experienced flat growth. Management's cost-saving initiatives and liquidity enhancing measures implemented to offset the challenging market conditions started to bear fruit, with EUR6 million of executed cost savings primarily linked to a reduction in staff. However, high exceptional costs linked to restructuring activities including consultant expenses, inventory clearance at discounts, a negative contribution from discontinued businesses (negative EUR3 million), led to low cash EBITDA (pre IFRS 16 lease expenses) of about EUR5 million. S&P said, "While we expect some EBITDA growth led by management's initiatives, we continue to forecast weak credit metrics over the next 12-18 months. In 2025, we forecast revenue growth of about 3% led by modest growth in all segments, with solar benefitting from its growing presence in the U.S. and France. We expect electrification to maintain growth since Europe requires network investments to support the energy transition, and continued growth from its well-performing logistics services segment. We forecast S&P Global Ratings-adjusted EBITDA to reach about EUR20 million thanks to realized efficiencies of about EUR11 million. However, this will be partially offset by margin compression in the solar segment, which faces an inventory clearance and weaker operating leverage in the U.S. and France, along with ongoing exceptional costs that remain high (at about EUR17 million). Despite these operating improvements, we continue to forecast elevated debt leverage of close to 20x at the end of 2025, and negative FFO given the high interest burden, with FFO cash interest coverage to remain below 1x. "While we acknowledge Amara's efforts to support cash flow generation, including strict inventory management that reduced the inventory balance by EUR16.5 million (excluding discontinued businesses) from March to June 2025, we forecast sustainably negative FOCF of EUR14 million-EUR22 million from 2025-2027. This is driven by our forecast high interest burden and some modest working capital outflows to support top-line growth, particularly in the U.S. and France. We estimate capex requirements to be EUR6 million-EUR7 million once Amara has implemented its new enterprise resource planning (ERP) system (which will lead to increased capex of about EUR12 million in 2025)." Weak forecast credit metrics, including negative FOCF generation driving a deteriorating liquidity position, support our view that Amara's capital structure is unsustainable. The company has no near-term debt maturities, and its revolving credit facility (RCF) is not due until three months before the senior secured notes in July 2028. In addition, the company still has sources of liquidity, including: EUR30 million in cash on the balance sheet at the end of June, 2025; EUR37 million (EUR20 million drawn) availability under the super senior RCF; an incremental EUR19 million that can be drawn under the factoring program (totaling EUR80 million, with the current utilization capacity estimated at about EUR40 million); and EUR11 million through bilateral loans and other short-term lines totaling close to EUR100 million. S&P said, "In our base case, we forecast that Amara will retain access to the super senior RCF until the end of 2025, despite a springing drawstop covenant at 1.42x, which activates when 40% drawn, as the legal documentation permits add-backs of pro forma synergies of up to 30% within consolidated EBITDA. Despite an existing liquidity buffer that should prevent a near-term liquidity crisis, we think Amara's liquidity position will weaken over the next 12-18 months led by the high interest burden and ongoing market uncertainty, along with costs associated with restructuring activities that will likely constrain significant EBITDA growth. As such, we believe Amara is currently vulnerable and is dependent on favorable business, financial, and economic conditions to meet its financial commitments." S&P said, "The negative outlook reflects our view that ongoing challenging and uncertain market conditions in Amara's key product sectors and geographies could lead to a further weakening in operating performance and lead us to believe that the company is likely to default in the next 12 months without an unforeseen positive development. "We could lower our ratings on Amara if we see a heightened risk of default in the next 12 months. This could occur, for example, if the business does not recover as we expect, leading to persistent and significantly negative FOCF and a sharp deterioration in liquidity. "We could revise the outlook to stable if Amara overperforms our projections and demonstrates a path to a sustained improvement in FOCF generation, leading to an enhanced liquidity profile and a more sustainable debt leverage position." =========== T U R K E Y =========== LIMAK CEMENT: Fitch Affirms 'B+' Long-Term IDR, Outlook Stable -------------------------------------------------------------- Fitch Ratings has affirmed Limak Cimento Sanayi Ve Ticaret Anonim Sirketi's (Limak Cement) Long-Term Issuer Default Ratings (IDR) at 'B+' with Stable Outlooks. Fitch has affirmed the senior unsecured rating at 'B+' with a Recovery Rating of 'RR4'. The affirmation reflects Limak's smaller scale and weaker geographical diversification than peers and foreign-exchange risks. Its strong 2024 performance is offset by moderate volume expectations, and the possibility of shareholder distributions. Key Rating Drivers Restricted Group Structure: Limak Cement is a wholly owned subsidiary of Limak Holding A.Ş. Under the current bond framework, its debt arrangements are independently structured, with no cross-guarantees or cross-default clauses, and supported by comprehensive ring-fencing provisions. Fitch assesses Limak Cement's legal separation as 'insulated'. Coupled with 'porous' access and control mechanisms, this structure supports a standalone credit rating. The bond covenants also impose constraints on the company's ability to significantly increase leverage, governed by a fixed charge coverage test that includes dividend distributions to the parent. Cost Structure Preserves Margins: Limak Cement's cost base demonstrated resilience against cost inflation in 2024, despite a high inflationary environment. The company maintained a cost of sales of TRY17.2 billion, down from TRY19.4 billion in 2023, reflecting inflation passthrough capabilities. With approximately 78% of its cost base directly or indirectly linked to the US dollar and only 22% linked to the Turkish lira, Limak Cement mitigates the impact of local-currency fluctuations. Fitch expects a stable EBITDA margin of 27% over the forecast period, commensurate with 'B' peers in Turkiye. Moderate Leverage: Fitch anticipates EBITDA gross leverage will remain below 3.5x for 2025-2028, an increase from 2.2x in 2024. The company raised an additional USD115 million in 2025 in debt to repay shareholder loans and build a cash buffer. Interest coverage is projected to stay modest at 3.5x on average. Limak Cement has repaid its amortising secured debt funding and the capital structure is dominated by its USD690 million fixed coupon instrument due in 2029. Capex Execution Risk Reducing: The company forecasts capex of about USD240 million (TRY12.65 billion) for 2025-2028. Approximately 50% of capex is for increasing renewables energy and decarbonisation projects. Fitch expects TRY4.3 billion capex for 2025 and TRY4.05 billion in 2026. This is driven by Limak Cement's commitment to green transition where it expects to reduce its CO2 emissions by nearly 34% mostly through decarbonisation of its cement production and the increasing contribution of renewable energy to its cost base and maximisation of alternative fuels. Positive FCF: Fitch expects the free cash flow (FCF) margin to remain positive for the forecast period, despite expansionary capex, but this may be offset by the possibility of discretionary dividend payouts. However, due to market-specific volatility, including hyperinflation, cash flow and working-capital management will depend on Limak Cement's continued ability to pass on rising costs in a timely manner while preserving market share. Scale Constrains Business Profile: The business profile is sustainable, albeit weaker than some Fitch-rated EMEA peers. The group has a strong market position in its domestic market in Turkiye, as the second-largest producer with 11% of the market by volume. It is less geographically diversified than larger peers and has a weaker market position globally. The group is a medium-sized producer with moderate pricing power but leading positions in strongly growing markets. Peer Analysis Limak Cement's scale is commensurate with 'B' category peers such as Cimko Cimento ve Beton San. Ve Tic A.S. (Cimko, B+/Stable) but significantly smaller than Fitch-rated heavy building materials peers, including Holcim Ltd (BBB+/Stable), CRH plc (BBB+/Stable) and CEMEX, S.A.B. de C.V. (Cemex, BBB-/Stable), which have stronger market positions and wider production networks. Limak Cement's product concentration and operations are concentrated in its domestic market, similar to Cimko, but unlike Titan S.A. (BB+/Stable). Titan derives its revenue from Greece, Turkiye, Egypt and several south-eastern European countries while the majority of Limak Cement's revenues are generated in Turkiye and limited by the operating environment. This is offset by Limak Cement's ability to leverage its logistical network to increase exports to European cities. Limak Cement's financial profile is broadly in line with Cemex's and weaker than CRH and Holcim. It has relatively weaker financial flexibility, as it has no access to committed credit facilities, offset by strong cash balances and a record of financial discipline. Fitch expects it to have an EBITDA margin of 26-27%, which is higher than Titan's and CRH's operating profitability, and in line with Cimko's margin of an average 28%. Fitch expects Limak Cement's FCF margin to improve in 2025 to over 5%, subject to any special dividend payment. This is stronger than most peers and Fitch expects it will rise as capex intensity reduces. Key Assumptions - Revenue growth of 15% on average in Turkish lira supported by stable sales volumes and demand for cement - EBITDA margin of 27% in 2025 and 28% thereafter reflecting reasonable pass through of costs and improving energy efficiency - No regular dividend payout based on current forecasts, but special dividends could be paid if performance is better than expected - Capex spiking at between 13% and 11% of revenue in 2025 and 2026 before falling to 8% thereafter Recovery Analysis - The recovery analysis assumes that Limak Cement would be deemed a going concern (GC) in bankruptcy and that it would be reorganised rather than liquidated - Its GC value available for creditor claims is estimated at about TRY24.7 billion, assuming GC EBITDA of TRY6.1 billion - GC EBITDA assumes a failure to broadly pass on raw-material cost inflation to customers. The assumption also reflects corrective measures taken in reorganisation to offset the adverse conditions that trigger its default - A 10% administrative claim - An enterprise value (EV) multiple of 4.5x EBITDA is applied to GC EBITDA to calculate a post-reorganisation EV. The multiple is based on Limak Cement's strong market position in Turkiye and good customer diversification. The EV multiple also reflects the group's concentrated geographical diversification, volatile FCF generation and the low cement price environment - Fitch estimates the total amount of senior debt claims at TRY26.2 billion, based on the USD690 million bond maturing 2029 at an exchange rate of TRY/USD of 38. - These assumptions result in a recovery rate for the senior unsecured instrument within the 'RR3' range, but the Country Specific Recovery Ratings for Turkiye are capped at 'RR4', with no uplift of the issue rating from Limak's Long-Term Foreign-Currency IDR of 'B+'. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Tighter links with the parent company - EBITDA gross above 3.5x on sustained basis - Neutral FCF generation Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA gross leverage below 2.5x on a sustained basis supported by a consistent financial policy - Sustainable FCF margins of at least 5% Liquidity and Debt Structure Limak Cement had about TR7.7 billion (USD193 million) of readily available cash at 1H25 with no significant scheduled debt repayments until 2029. The capital structure is based almost entirely on its USD690 million 9.75% bond due in July 2029. The group does not have access to committed borrowing facilities. Fitch expects Limak Cement to maintain significant cash balances of over USD100 million (TRY4 billion). Fitch adjusts cash down by TRY825 million for intra-year working capital volatility, which is about 2.5% of revenue. The group has access to uncommitted short-term funding from local and international banks. However, given the short-term nature of these facilities, they are excluded from its liquidity calculations. Issuer Profile Limak Cement is the second-largest cement producer in Turkiye by capacity, operating 11 cement factories and 31 ready-mix concrete plants. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations Limak Cimento Sanayi Ve Ticaret Anonim Sirketi has an ESG Relevance Score of '4' for Financial Transparency due to lack of interim IFRS reporting, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Limak Cimento Sanayi Ve Ticaret Anonim Sirketi LT IDR B+ Affirmed B+ LC LT IDR B+ Affirmed B+ senior unsecured LT B+ Affirmed RR4 B+ =========================== U N I T E D K I N G D O M =========================== ARGENTEX FOREIGN: FRP Advisory Named as Joint Administrators ------------------------------------------------------------ Argentex Foreign Exchange Limited was placed into administration proceedings in the High Court of Justice Court Number: CR-2025-005183, and Daniel Conway, Anthony John Wright, and David Paul Hudson of FRP Advisory Trading Limited, were appointed as joint administrators on July 28, 2025. Argentex Foreign Exchange was a holding company. Its registered office is at 25 Argyll Street, London, W1F 7TU, to be changed to C/o FRP Advisory Trading Limited, 2nd Floor, 110 Cannon Street, London, EC4N 6EU. Its principal trading address is at 25 Argyll Street, London, W1F 7TU. The joint administrators can be reached at: Daniel Conway Anthony John Wright David Paul Hudson FRP Advisory Trading Limited 2nd Floor, 110 Cannon Street London, EC4N 6EU Further details contact: The Joint Administrators Tel: 020 3005 4000 Alternative contact: Jacob Kench Email: cp.london@frpadvisory.com CHESHIRE 2025-1: Fitch Assigns 'BB-(EXP)sf' Rating to Cl. F Notes ----------------------------------------------------------------- Fitch Ratings has assigned Cheshire 2025-1 PLC expected ratings, as listed below. Entity/Debt Rating ----------- ------ Cheshire 2025-1 PLC A XS3140971576 LT AAA(EXP)sf Expected Rating B XS3140988463 LT AA(EXP)sf Expected Rating C XS3141004179 LT A-(EXP)sf Expected Rating D XS3141017585 LT BBB(EXP)sf Expected Rating E XS3141022239 LT BB(EXP)sf Expected Rating F XS3141022312 LT BB-(EXP)sf Expected Rating X XS3141023633 LT CCC(EXP)sf Expected Rating Transaction Summary The transaction will be a securitisation of UK non-conforming (UKN) owner-occupied (OO; 74.1%) and buy-to-let (BTL; 25.9%) mortgages originated in the UK by various legacy non-conforming lenders. The assets were previously securitised in the Formentera PLC (56.8%) and Cheshire 2020-1 PLC (43.2%) transactions. The former was a Fitch-rated transaction. Barclays Bank PLC will be the transaction sponsor and Pepper (UK) Limited and Topaz Finance Limited will act as legal title holders and servicers for the two sub-pools, respectively. KEY RATING DRIVERS Seasoned Non-Conforming Loans: The portfolio is highly seasoned (18 years) with 95.7% (by current balance) originated between 2006-2008. The pool has a high weighted average (WA) original loan-to-value (LTV) of 89.7% but has benefited from a degree of borrower deleveraging, with a WA current LTV of 82.5%, and a significant amount of indexation leading to a WA indexed current LTV of 52.5%. This leads to an overall WA sustainable LTV of 56.0%. The pool is typical for pre-global financial crisis UK non-conforming transactions rated by Fitch, with pre-2014 OO origination and high proportions of self-certified and interest-only loans as well as a significant proportion of the pool currently in arrears for longer than one month (24.6%). Fitch therefore applied the UKN and BTL assumptions set out in its UK RMBS Rating Criteria. Standard Transaction Adjustment, Data Adjustments: The historical performance of the pool since June 2020 has been in line with Fitch's UKN Index but underperformed its BTL Index. It has also largely performed in line with other Fitch-rated UKN/BTL transactions. This would ordinarily lead us to apply a transaction adjustment of 1.0x to the OO portion and 1.5x to the BTL portion, respectively. However, there are several fields with incomplete or missing data in the pool tape, particularly for adverse credit. This data would be less determinative of future performance than recent and historical performance data, but for such a seasoned pool it is nonetheless data typically provided for UKN pools Fitch rates. This data, along with other missing fields, led Fitch to apply a further 1.2x foreclosure frequency (FF) adjustment to the entire pool. Pay Rate Analysis: Borrower pay rates since June 2020 have averaged 100.6%, reflecting over-payments. When capping pay rates at 100% (monthly payments due only), to strip out overpayments, it decreases to 88%. Furthermore, pay rates for borrowers in late-stage arrears (greater than three months) average around half of the monthly payment due over the last five years, while borrowers in arrears for more than 12 months have averaged under a third. Fitch redefines loans in arrears greater than 12 months as defaulted from day one under its UK RMBS Rating Criteria. Limited Representations & Warranties Framework: The loan warranties provided by the seller will be limited by the awareness that it was not the originator of the assets. The seller will provide warranty indemnity cover for two years from close for any breaches of the loan warranties. In its analysis, Fitch placed more emphasis on the lack of breaches in past transactions containing these assets; the agreed procedures report (AUP) completed at the close of each original transaction; the AUP provided for this transaction in line with that on other non-conforming transactions; and the seasoning of the assets. These factors make any material representations & warranties breaches unlikely. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The transaction's performance may be affected by changes in market conditions and the economic environment. Weakening economic performance is strongly correlated to increasing levels of delinquencies and defaults that could reduce the credit enhancement available to the notes. In addition, unexpected declines in recoveries could result in lower net proceeds, which may make certain notes susceptible to negative rating action depending on the extent of the decline in recoveries. Fitch conducts sensitivity analyses by stressing a transaction's base-case WAFF and weighted average recovery rate (WARR) assumptions. For example, a 15% increase in the WAFF and a 15% decrease in the WARR indicate downgrades of up to one notch for the class A notes, three notches for the class B notes, two notches for class C notes, and several notches for the class D, E, F and X notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Stable to improved asset performance driven by stable delinquencies and defaults would lead to increasing credit enhancement and potential upgrades. Fitch tested an additional rating sensitivity scenario by applying a decrease in the WAFF of 15% and an increase in the WARR of 15%, The impact on the notes could be upgrades of up to three notches for the class B notes, four notches for the class C, D and E notes, and five notches for the class F notes. The class A notes are at the highest level on Fitch's scale and cannot be upgraded. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY The pool tape contained incomplete or missing data for a number of fields: employment type, income verification, adverse credit. Fitch applied an FF adjustment of 1.2x to the pool. Fitch reviewed the results of a third-party assessment conducted on the asset portfolio information and concluded that there were no findings that affected the rating analysis. Overall, and together with the assumptions referred to above, Fitch's assessment of the asset pool information relied upon for Fitch's rating analysis according to its applicable rating methodologies indicates that it is reliable. ESG Considerations Cheshire 2025-1 PLC has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security due to the high proportion of interest-only loans in legacy OO mortgages, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Cheshire 2025-1 PLC has an ESG Relevance Score of '4' for Human Rights, Community Relations, Access & Affordability due to a large proportion of the pool containing OO loans advanced with limited affordability checks, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. CHESHIRE 2025-1: S&P Puts Prelim B+ (sf) Rating to Cl. F-Dfrd Notes ------------------------------------------------------------------- S&P Global Ratings assigned preliminary credit ratings to Cheshire 2025-1 PLC's class A to X-Dfrd U.K. RMBS notes. At closing, the issuer will issue unrated class Z and R notes and X and Y certificates. The pool for Cheshire 2025-1 PLC contains GBP276.6 million first-lien BTL and owner-occupied residential mortgage loans located in the U.K. S&P considers the collateral to be nonconforming based on the prevalence of loans to self-certified borrowers and borrowers with adverse credit history, such as prior county court judgments (CCJs), an individual voluntary arrangement, or a bankruptcy order. The transaction is a refinancing of the Formentera Issuer PLC and Cheshire 2020-1 PLC transactions, which first closed in February 2022 and August 2020, respectively. The loans in both portfolios were originated between 2000 and 2008 by multiple originators. S&P said, "The issuer is an English SPE, which we consider to be bankruptcy remote. We expect to assign credit ratings at closing subject to a satisfactory review of the transaction documents and legal opinions." Interest will be paid quarterly on the IPD beginning in December 2025. The rated notes pay interest equal to compounded daily SONIA plus a class-specific margin, with a further step-up margin following the optional call date in September 2028. All the notes will reach legal final maturity in May 2067. S&P said, "Our standard cash flow analysis indicates that the available credit enhancement for the class D-Dfrd, E-Dfrd, and F-Dfrd notes is commensurate with higher ratings than those currently assigned. However, the ratings on these notes also reflect their ability to withstand joint lead manager fees paid senior in the waterfall, lower pay rates on loans in arrears, and delayed repayment on interest-only loans in the original transactions since they initially closed. "Our preliminary rating on the class X-Dfrd notes reflects the results of cash flow runs with standard assumptions and higher levels of prepayments. In these cash flow runs, the class X-Dfrd notes face shortfalls at the 'B' rating level. Therefore, we applied our 'CCC' criteria to assess if either a rating of 'B-' or in the 'CCC' category would be appropriate for these notes. In the steady state scenario, where the current level of stress shows little to no increase and collateral performance remains steady, the notes continue to face shortfalls at the 'B' rating level. Therefore, we consider this class of notes to be currently vulnerable and dependent upon favorable business, financial, and economic conditions to pay timely interest and ultimate principal. We consequently assigned a preliminary 'CCC (sf)' rating to this class of notes. "The documented replacement mechanisms adequately mitigate the transaction's exposure to counterparty risk for the collection account providers and the transaction account provider in line with our counterparty criteria. "In our view, the ability of the borrowers to repay their mortgage loans will be highly correlated to macroeconomic conditions, particularly the unemployment rate, consumer price inflation, and interest rates. Our ratings reflect our current macroeconomic outlook for the U.K." Preliminary ratings Class Preliminary rating Class size (%) A AAA (sf) 74.85 B-Dfrd AA (sf) 6.15 C-Dfrd A (sf) 5.35 D-Dfrd BBB+ (sf) 3.00 E-Dfrd BB (sf) 2.95 F-Dfrd B+ (sf) 1.30 X-Dfrd CCC (sf) 1.25 Z NR 6.40 R NR 1.66 X Certs NR N/A Y Certs NR N/A NR--Not rated. N/A--Not applicable. EUROSAIL-UK 07-3: Fitch Lowers Rating on Class D1a Notes to 'B-sf' ------------------------------------------------------------------ Fitch Ratings has downgraded Eurosail-UK 07-3 BL Plc's (ES07-3) class C1a/ C1c, Class D1a notes and Eurosail-UK 07-4 BL Plc's (ES07-4) class C1a notes. All tranches have been removed from Under Criteria Observation. Entity/Debt Rating Prior ----------- ------ ----- Eurosail-UK 07-3 BL Plc Class A3a 29880YAG4 LT AAAsf Affirmed AAAsf Class A3c 29880YAJ8 LT AAAsf Affirmed AAAsf Class B1a 29880YAK5 LT AAAsf Affirmed AAAsf Class B1c 29880YAM1 LT AAAsf Affirmed AAAsf Class C1a 29880YAN9 LT BBBsf Downgrade A-sf Class C1c 29880YAQ2 LT BBBsf Downgrade A-sf Class D1a 29880YAR0 LT B-sf Downgrade B+sf Class E1c XS0308725844 LT CCCsf Affirmed CCCsf Eurosail-UK 07-4 BL Plc Class A3 XS1150797600 LT AAAsf Affirmed AAAsf Class A4 XS1150799481 LT AAAsf Affirmed AAAsf Class A5 XS1150799721 LT AAAsf Affirmed AAAsf Class B1a 29881BAK4 LT AAsf Affirmed AAsf Class C1a 29881BAN8 LT BBsf Downgrade BB+sf Class D1a 29881BAR9 LT CCCsf Affirmed CCCsf Class E1c XS0311717416 LT CCsf Affirmed CCsf Transaction Summary The transactions comprise UK non-conforming mortgage loans originated by Southern Pacific Mortgage Limited, Preferred Mortgages Limited (both formerly wholly-owned subsidiaries of Lehman Brothers), London Mortgage Company and Alliance and Leicester Plc. KEY RATING DRIVERS UK RMBS Rating Criteria Updated: The rating actions reflect Fitch's updated UK RMBS Rating Criteria (see " Fitch Ratings Updates UK RMBS Rating Criteria" dated 23 May 2025). Key changes include updated representative pool weighted average foreclosure frequencies (WAFF), changes to sector selection, revised recovery rate assumptions and changes to cash flow assumptions. The most significant revision was to the non-confirming sector representative 'Bsf' WAFF. Fitch applies newly introduced borrower-level recovery rate caps to underperforming seasoned collateral. Dynamic default distributions and high prepayment rate assumptions are now applied rather than static assumptions previously. Late Stage Arrears: In line with the updated criteria, Fitch's analysis assumes that loans more than 12 months in arrears are defaulted for the purposes of its asset and cash flow modelling. For ES07-3 this represents 11.5% of the total portfolio and for ES07-4 13.3%. Transaction Adjustment: Fitch has applied its non-conforming assumptions and an owner-occupied transaction adjustment of 1.0x and buy-to-let transaction adjustment of 1.5x for both transactions. This is due to the historical performance of loans with arrears greater than three months being weaker than Fitch's non-conforming index for both transactions. Late Stage Arrears Accumulation: The proportion of loans in arrears by more than three months has increased for both transactions since last year's review (March 2024 interest payment date compared with March 2025 interest payment date) to 28.8% from 23.1% for ES07-3, and to 28.5% from 23.3% for ES07-4. Fitch believes that late-stage arrears accumulation will continue, despite decreasing interest rates, given the limited repossession activity. The continued performance deterioration and build up in late-stage arrears has driven the downgrades of ES07-3's class C1a/C1c and D1a notes and ES07-4's class C1a notes. Senior Fees Remain High: Both transactions continue to incur higher than expected senior fee expenses with total non-servicing fees over GBP350,000 over the last 12 months in both transactions. As previously disclosed, the ratings are sensitive to the senior fee assumptions applied and any increase in this assumption could lead to lower model-implied ratings and downgrades at future reviews. This continues to be reflected in the Negative Outlooks on ES07-3's class C1a/C1c and D1a notes and ES07-4's class B1a and C1a notes. Increasing CE: ES07-3's sequential amortisation has resulted in continued build-up of credit enhancement (CE) for all its notes. ES07-4 continues to amortise sequentially following an arrears trigger breach at the September 2023 interest payment date. Despite the pool's deteriorating asset performance, the continued material increase in CE supports the affirmation of the class A and B notes. ES07-4 allows for pro rata amortisation subject to multiple sequential switch triggers. Given the high arrears and low pool factor (15.3%, close to the mandatory sequential pay at 10%) Fitch expects sequential amortisation to continue. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The transactions' performance may be affected by adverse changes in market conditions and the economic environment. Weakening economic performance is strongly correlated to increasing delinquencies and defaults that could reduce CE available to the notes. Fitch found that a 15% increase in the WAFF and 15% decrease of the weighted average recovery rate (WARR) would imply the following: ES07-3: Class C1a/C1c: 'BBsf' Class D1a/: NR ES07-4: Class B1a: 'Asf' Class C1a: 'CCCsf' Class D1a: NR Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Stable to improved asset performance driven by stable delinquencies and defaults would lead to increasing CE and potentially upgrades. Fitch found that a 15% decrease in the WAFF and 15% increase of the WARR would result in the following: ES07-3: Class C1a/C1c: 'BBB+sf' Class D1a/: 'BBsf' Class E1c/: 'B-sf' ES07-4: Class B1a: 'AAAsf' Class C1a: 'BBB+sf' Class D1a: 'BBsf' USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Fitch did not undertake a review of the information provided about the underlying asset pool ahead of the transaction's initial closing. The subsequent performance of the transaction over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations Eurosail-UK 07-3 BL Plc has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security due to {DESCRIPTION OF ISSUE/RATIONALE}, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. Eurosail-UK 07-3 BL Plc has an ESG Relevance Score of '4' for Human Rights, Community Relations, Access & Affordability due to {DESCRIPTION OF ISSUE/RATIONALE}, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. Eurosail-UK 07-4 BL Plc has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security due to {DESCRIPTION OF ISSUE/RATIONALE}, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. Eurosail-UK 07-4 BL Plc has an ESG Relevance Score of '4' for Human Rights, Community Relations, Access & Affordability due to {DESCRIPTION OF ISSUE/RATIONALE}, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. G.T.B. COMPONENTS: Forvis Mazars Named as Administrators -------------------------------------------------------- G.T.B. Components Limited was placed into administration proceedings in the High Court of Justice Business and Property Court in Manchester, Insolvency and Companies List (ChD) Court Number: CR-2025-1023, and Conrad Alexander Pearson and Patrick Lannagan of Forvis Mazars LLP, were appointed as administrators on July 23, 2025. G.T.B. Components specialized in powder metal parts manufacturing. Its registered office and principal trading address is at Fleet Lane, St. Helens, Merseyside, WA9 1TA. The joint administrators can be reached at: Patrick Lannagan Conrad Alexander Pearson Forvis Mazars LLP One St Peter's Square, Manchester M2 3DE Further details contact: Angela Ramzan Email: Angela.Ramzan@mazars.co.uk Tel No: 0161 238 9298 GREENE KING: S&P Lowers Class B Notes Rating to 'BB (sf)' --------------------------------------------------------- S&P Global Ratings lowered to 'BBB- (sf)' from 'BBB (sf)', 'BB+ (sf)' from 'BBB- (sf)', and to 'BB (sf)' from 'BB+ (sf)' its credit ratings on Greene King Finance PLC's class A, AB, and B notes, respectively. Since S&P's previous review in June 2024, Greene King lowered the liquidity facility amount to GBP205 million from GBP224 million to reflect the 18-month' peak debt coverage ceiling following repayment on the notes. Simultaneously, as a part of the restructure, the liquidity facility commitment and draw fees are now lower than previously paid, and there are no longer limits to maximum utilization of the facility on the mezzanine and junior notes. Greene King Finance is a corporate securitization of the U.K. operating business of the managed and tenanted pub estate operator Greene King Retailing Ltd., the borrower. It originally closed in March 2005 and has been tapped several times since, most recently in February 2019. Recent performance and macroeconomic considerations Greene King Retailing disposed 24 pubs from its securitized portfolio in the 2024 fiscal year that ended in December 2024. The issuer reported total revenue of GBP1,027 million, which increased by about 1.8% from 2023 fiscal year, underpinned by price increases due to higher inflation that offset weak volume trends in the pub sector. The S&P Global Ratings-adjusted EBITDA margin (post-IFRS 16) moderated to 18.2% in 2024 from 18.9% in 2023 due to the absence of procurement benefits. S&P understands that the group's procurement entity had supported the securitized structure's cash flow and liquidity by temporarily charging no central overheads to Greene King Retailing since the pandemic, so that Greene King Retailing was able to service its debt and meet free cash flow debt service coverage ratio (DSCR) covenants. As such benefits are rolled back and the 2024 margin reflects the underlying profitability level. The profitability level remains below pre-COVID-19 pandemic levels of about 26% in 2019. While revenue per pub had exceeded the 2019 level already by 2023 across managed and tenanted pubs, EBITDA per managed pub remains about 18% lower and EBITDA per tenanted pub has recovered to the 2019 level. Price inflation eased during 2024. In addition, volume in the pub sector has become softer amid weak consumer sentiment and macroeconomic uncertainty. The U.K. job market is weakening with payrolled employment and vacancies recently falling below pre-pandemic levels. S&P said, "We expect volume and spend per head for the sector to remain suppressed by tight discretionary spending, which will dampen topline expansion in fiscal 2025 and beyond as pub operators respond with slower price increases. We think that Greene King Retailing's scale, some brand diversity, and investments in optimizing its product and pub mix within its estate should mitigate some volume pressure and support topline performance." S&P said, "We continue to expect the profitability of the sector to stabilize at a lower equilibrium compared to pre-pandemic levels, reflecting weak consumer sentiment, and structurally higher labor costs (due to a higher national living wage and employers' national insurance contributions from the U.K. Autumn Budget). We also consider the persistently high input and electricity costs amid ongoing regional conflicts and supply chain uncertainties from escalating tariff tensions. In our view, what underpins a stabilized margin in our forecast periods-albeit at a lower level-is that large operators will still have some headroom in streamlining costs in labor scheduling, energy use, and menu engineering, and scaling up the efficiency initiatives throughout their estate, amongst broader efforts in capturing footfall through ongoing estate upgrades. "We continue to assess the borrower's business risk profile (BRP) as fair, supported by the group's strong position as one of the top three pub operators in the U.K., its well-invested estate, and the added flexibility of its cost structure due to high levels of real estate ownership." Rating Rationale Greene King Finance's primary sources of funds for principal and interest payments on the outstanding notes are the loan interest and principal payments from the borrower, which are ultimately backed by future cash flows generated by the operating assets. S&P's ratings address the timely payment of interest and principal due on the notes, excluding any subordinated step-up coupons. S&P said, "We have applied our corporate securitization criteria as part of our rating analysis of the notes in this transaction. As part of our analysis, we assess whether the operating cash flows generated by the borrower are sufficient to make the payments required under the notes' loan agreements by using a DSCR analysis under a base-case and a downside scenario. Our view of the borrowing group's potential to generate cash flows is informed by our base-case operating cash flow projection and our assessment of its BRP, which we derive using our corporate methodology. "We typically do not give credit to growth after the first two years. However, in our previous review, we considered the growth period to continue through fiscal year 2026 to accommodate both the duration of the effect from inflationary pressures and the subsequent recovery. We continue to expect the growth period to remain through fiscal year 2026. On this basis, we have now given credit to growth only for the next two years." As the business environment recovers from COVID-19 pandemic, the central overhead benefits provided by the group's procurement entity to whole business securitization (WBS) was terminated, which added to the cost pressures in the current macroeconomic environment. This led to the EBITDA margin falling from 2023 to 2024. These higher costs are accordingly reflected in our base-case operating cash flow available for debt service. S&P said, "In contrast to our previous review, we begin our analysis with the construction of our base-case operating cash flow projections and determine a base case anchor, that does not reflect the issuer's liquidity support level. Our downside DSCR analysis assesses the transaction's resilience to improvements in the issuer level structural enhancements under a moderate stress scenario. Greene King Retailing falls within the pubs, restaurants, and retail industry. Considering U.K. pubs' historical performance during the 2007-2008 financial crisis, in our view, a 15% and 25% decline in EBITDA from our base case is appropriate for the managed and tenanted pub subsectors. We then perform our modifier and comparable rating analysis. "We believe macroeconomic conditions have now been set at a new normal for the sector, hence we no longer consider delayed EBITDA recovery from the COVID-19 pandemic or extraordinary inflationary pressures in our analysis. The EBITDA margin for the overall pub sector sits at a new, lower equilibrium, in our view, and will not fully recover to pre-pandemic levels in our forecast periods. We therefore no longer apply paragraph 46 of our corporate securitization criteria to determine the resilience-adjusted anchor based solely on the downside analysis." Business risk profile S&P continues to assess the borrower's BRP as fair, supported by the group's strong position as one of the top three pub operators in the U.K., its well invested estate, and its family-friendly offering with drinks generating just over half of its revenue. DSCR analysis S&P's cash flow analysis serves to both assess if cash flows will be sufficient to service debt through the transaction's life and to project minimum DSCRs in our base-case and downside scenarios. Counterparty risk S&P's ratings are not currently constrained by the ratings on any of the counterparties, including the liquidity facility, derivatives, and bank account providers. The notes are supported by hedging agreements with the London branch of Banco Santander, S.A. (interest rate swaps for the floating-rate class B1 and B2 notes). S&P said, "We assess the collateral framework as low under our counterparty criteria, notably due to the type of collateral that can be posted, which we do not view as eligible under our criteria, or lower haircuts for collateral denominated in currencies other than British pound sterling. But because the replacement commitment is sufficiently robust, based on our counterparty criteria, we give credit to it. As the swaps in this transaction are collateralized, we consider the resolution counterparty rating on the swap counterparty as the applicable counterparty rating." Outlook S&P said, "We expect the pub sector's margins to stabilize at a new, lower equilibrium over the next 12 months as the sector grapples with demand and cost headwinds. We see a deviation in the recovery trajectory of EBITDA per pub, with tenanted pubs expected to recover to 2019 levels by 2025-2027, while managed pubs continue to remain subdued in the forecast period. We expect pub operators to continue to prioritize agility in meeting shifting consumer preferences, efficiency of their operations, and cash generation, underpinning the new margin levels and growing the maintenance covenant headroom." For many rated pub operators, their significant freehold property portfolios offer substantial operational and financial flexibility. Proceeds generated from disposals provide an additional source of funding for capital investment underpin strategic initiatives. For example, in 2024, Marston's Pubs generated GBP40.2 million from disposals of non-core asset sales. S&P still expects the quality of earnings to remain the defining factor in the pub operators' credit profile compared with the amount of real estate ownership. Downside scenario S&P said, "We may consider lowering our ratings on the notes if their minimum projected DSCRs in our downside scenario have a material, adverse effect on each tranche's resilience-adjusted anchor. "We could also lower our ratings on the class A, AB, or B notes if a deterioration in trading conditions related to a general weakness in consumer spending materially increases leverage at the borrowing group from the current level or reduces cash flows available to the borrowing group to service its rated debt. However, the quality of earnings will, in our view, be largely driven by industry trading conditions and the pubs' ability to manage competitive and cost pressures amid consumer demand volatility. Consequently, our ratings on the notes may be negatively affected if the borrower's revenue- and margin-driving measures are less effective in mitigating cost headwinds compared to our forecast, or if there are any missteps in working capital management leading to significant cash outflows, that would use up the existing covenant headroom or lead to lower profitability equilibrium than expected." Upside scenario S&P said, "Due to ongoing macroeconomic uncertainties around weak consumer sentiment and geopolitical tensions, we do not anticipate raising our assessment of Greene King's BRP over the near to medium term. We could raise our ratings on the class A, AB, or B notes if our assessment of the borrower's overall creditworthiness improves, which reflects its financial and operational strength over the short- to medium-term. In particular, we would consider lower leverage and the ability to generate higher cash flows, as well as higher covenant headroom, when evaluating the scale of any improvement. Also, we could raise our ratings on the class A, AB and B notes, if the company continues to prove resilience to and navigate cost pressures and soft consumer sentiment, and if our minimum DSCRs improve to the upper end of 1.30x-1.80x minimum base-case DSCR ranges." HUMBER SERVICES: Quantuma Advisory Named as Administrators ---------------------------------------------------------- Humber Services Ltd was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales Court Number: CR-2025-005277, and Simon Campbell and Andrew Watling of Quantuma Advisory Limited were appointed as administrators on Aug. 1, 2025. Humber Services specialized in passenger land transport. Its registered office is at Old Factory Buildings, Old Doncaster Road, Rotherham, S63 7EE and it is in the process of being changed to Office D, Beresford House, Town Quay, Southampton, SO14 2AQ. Its principal trading address is at Old Factory Buildings, Old Doncaster Road, Rotherham, S63 7EE. The joint administrators can be reached at: Andrew Watling Simon Campbell Quantuma Advisory Limited Office D, Beresford House Town Quay, Southampton, SO14 2AQ For further details, please contact: Francesca Cook Tel No: 023 8033 6464 Email: francesca.cook@quantuma.com LANDMARK MORTGAGE NO.2: Fitch Lowers Rating on Cl. D Notes to B+sf ------------------------------------------------------------------ Fitch Ratings has affirmed Landmark Mortgage Securities No.1 Plc (LMS1), while revising the class B notes' Outlook to Negative from Stable. It has also downgraded Landmark Mortgage Securities No.2 Plc (LMS2) class D notes and assigned a Negative Outlook. All notes in Landmark Mortgage Securities No.3 Plc (LMS3) have been affirmed with Stable Outlook. All notes have been removed from Under Criteria Observation. Entity/Debt Rating Prior ----------- ------ ----- Landmark Mortgage Securities No.3 Plc A XS1110731806 LT AA-sf Affirmed AA-sf B XS1110738132 LT A+sf Affirmed A+sf C XS1110745004 LT A-sf Affirmed A-sf D XS1110750699 LT BBBsf Affirmed BBBsf Landmark Mortgage Securities No.2 Plc Class Aa XS0287189004 LT AAAsf Affirmed AAAsf Class Ac XS0287192727 LT AAAsf Affirmed AAAsf Class Ba XS0287192131 LT A+sf Affirmed A+sf Class Bc XS0287193451 LT A+sf Affirmed A+sf Class C XS0287192214 LT BBBsf Affirmed BBBsf Class D XS0287192644 LT B+sf Downgrade BB-sf Landmark Mortgage Securities No.1 Plc Class B XS0260675888 LT AAAsf Affirmed AAAsf Class Ca XS0258052165 LT A+sf Affirmed A+sf Class Cc XS0261199284 LT A+sf Affirmed A+sf Class D XS0258052751 LT B+sf Affirmed B+sf Transaction Summary The transactions are securitisations of UK non-conforming owner-occupied (OO) and buy-to-let (BTL) mortgages, originated by Amber Home Loans, Infinity Mortgages, and Unity Homeloans for LMS1 and LMS2 and by GMAC-RFC Limited, Infinity Mortgages, and Unity Homeloans for LMS3. KEY RATING DRIVERS UK RMBS Rating Criteria Updated: The rating actions reflect Fitch's updated UK RMBS Rating Criteria (see " Fitch Ratings Updates UK RMBS Rating Criteria" dated 23 May 2025). Key changes include updated representative pool weighted average foreclosure frequencies (WAFFs), changes to sector selection, revised recovery rate assumptions and changes to cashflow assumptions. The non-conforming sector representative 'Bsf' WAFF has seen the most significant revision. Newly introduced borrower-level recovery rate caps are applied to underperforming seasoned collateral. Dynamic default distributions and high prepayment rate assumptions are now applied rather than the previous static assumptions. Transaction Adjustment: Fitch has applied its non-conforming assumptions and an OO transaction adjustment of 1.0x and BTL transaction adjustment of 1.5x. The portion of loans in arrears by more than three months has underperformed Fitch's non-conforming index in LMS1 and LMS2 whilst LMS3 has performed in line with the index. BTL Recovery Rate Cap: The transaction has reported losses that exceed its expectations based on the indexed value of the properties in the pool. Fitch has therefore applied borrower-level recovery rate (RR) caps to the BTL loans in the transactions, in line with those applied to non-conforming loans, where the RR cap is 85% at 'Bsf' and 65% at 'AAAsf'. Increasing Arrears: Late-stage arrears have increased since the last review a year ago. The reported three-months arrears have increased to 22.8% from 21.9% for LMS1, to 25.8% from 23.4% for LMS2 and to 17.8% from 15.5% for LMS3. Fitch expects performance to continue to deteriorate as all pools' arrears concentration levels increase with the redemption of performing loans. This risk is underlined in the Negative Outlook on LMS1's class B and LMS2's class C and D notes on Outlook Negative, signaling potential downgrades. Tail Risk: The transactions are exposed to significant tail risks in light of pro-rata payments and interest-only (IO) exposure. In particular, LMS1 has breached its sequential switch-back trigger as its outstanding principal balance has fallen below 10% of the original balance. Consequently, the transaction will amortise sequentially until maturity. LMS2 mitigates pro-rata amortisation risk with the same switch-back trigger but LMS3 lacks this mitigating feature. LMS3's class A notes' rating remains constrained by the account bank provider's rating (HSBC Bank plc; AA-/Stable/F1+), where the reserve fund is held. This could be the only source of credit enhancement (CE) in scenarios where the collateral performance deteriorates but remains within the conditions for pro-rata payments. Fitch has affirmed the ratings below their model-implied ratings and will not upgrade LMS3's notes beyond the level of the account bank provider. Decreasing Pool Granularity: The pool sizes continue to decrease leading to concentration risks, with 158, 498 and 604 loans currently remaining for LMS1, LMS2 and LMS3, respectively. This represents a significant concentration risk, especially considering their deteriorating asset performance. To account for this risk, Fitch has revised the Outlook on the class B notes in LMS1 to Negative and may downgrade the rating should it fail to pay down considerably over the next 12 months. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The transaction's performance may be affected by adverse changes in market conditions and the economic environment. Weakening economic performance is strongly correlated to increasing delinquencies and defaults that could reduce CE available to the notes. In addition, unexpected declines in recoveries could result in lower net proceeds, which may make certain notes susceptible to negative rating action, depending on the extent of the decline in recoveries. Fitch found that a 15% increase in the WAFF and 15% decrease of the weighted average recovery rate (WARR) would imply the following: LMS1: Class B - 'AAAsf' Class Ca/Cc - 'AAAsf' Class D - 'B+sf' LMS2: Class Aa/Ac - 'AAAsf' Class Ba/Bc - 'A-sf' Class C - 'B+sf' Class D - 'CCCsf' LMS3: Class A - 'AA-sf' Class B - 'AA-sf' Class C - 'BBB+sf' Class D - 'BBsf' Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Stable to improved asset performance driven by stable delinquencies and defaults would lead to increasing CE and, potentially, upgrades. Fitch found that a 15% decrease in the WAFF and 15% increase of the WARR would imply the following: LMS1: Class B - 'AAAsf' Class Ca/Cc - 'A+sf' Class D - 'A+sf' LMS2: Class Aa/Ac - 'AAAsf' Class Ba/Bc - 'A+sf' Class C - 'A+sf' Class D - 'BBB-sf' LMS3: Class A - 'AA-sf' Class B - 'AA-sf' Class C - 'AA-sf' Class D - 'AA-sf' USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pools and the transactions. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Fitch did not undertake a review of the information provided about the underlying asset pools ahead of the transactions' initial closing. The subsequent performance of the transactions over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations All three transactions have an ESG Relevance Score of '4' for customer welfare - fair messaging, privacy & data security due to a material concentration of IO loans, which has a negative impact on the credit profiles, and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. MATCH FINANCIAL: S&W Partners Named as Joint Administrators ----------------------------------------------------------- Match Financial Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales, Insolvency & Companies List (ChD) Court Number: CR-2025-05210, and Simon Jagger and Ben Woodthorpe of S&W Partners LLP, were appointed as joint administrators on July 29, 2025. Match Financial specialized in information technology consultancy activities. Its registered office and principal trading address is at 4th Floor 100 Fenchurch Street, London, EC3M 5JD. The joint administrators can be reached at: Simon Jagger Ben Woodthorpe S&W Partners LLP c/o RRS Department 45 Gresham Street, London EC2V 7BG For further details contact: The Joint Administrators Tel: 020 4617 5500 Alternative contact: Jay Barton OPTIMAL COMPLIANCE: Quantuma Advisory Named as Administrators ------------------------------------------------------------- Optimal Compliance Services (London) LLP was placed into administration proceedings in the High Court of Justice Business and Property Courts in England and Wales Court Number: CR-2025-005003, and Nicholas Simmonds and Chris Newell of Quantuma Advisory Limited were appointed as administrators on July 30, 2025. Optimal Compliance Services specialized in business consulting. Its registered office is at 81 The Cut, London, SE1 8LL and it is in the process of being changed to 1st Floor, 21 Station Road, Watford, Herts, WD17 1AP. Its principal trading address is at 81 The Cut, London, SE1 8LL. The administrators can be reached at: Nicholas Simmonds Chris Newell Quantuma Advisory Limited 1st Floor, 21 Station Road Watford, Herts, WD17 1AP For further details, contact: Silvia Fernandes Tel No: 01923 954 179 Email: Silvia.Fernandes@quantuma.com PAYME GROUP: Creditors' Meeting Set for Aug. 20 ----------------------------------------------- A meeting of the creditors of Payme Group Limited will be held on August 20, 2025, at 10:00 a.m. thru virtual meeting by telephone conference call. Payme Group Limited, with registered office at 1066 London Road, Leigh on Sea, Essex, SS9 3NA, was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales, Insolvency & Companies List (ChD) Court Number: CR-2025-003257, and Dominik Thiel-Czerwinke and Wayne MacPherson were appointed as joint administrators on May 13, 2025. The Administrator for Payme Group is seeking a decision from creditors on the approval of proposals by way of a virtual meeting. Details of how to access the virtual meeting are included in the notice delivered to creditors. If any creditor has not received this notice or requires further information please contact the Administrator using the details below. A creditor may appoint a person as a proxy-holder to act as their representative and to speak, vote, abstain or propose resolutions at the meeting. A proxy for a specific meeting must be delivered to the chair before the meeting. A continuing proxy must be delivered to the Administrator and may be exercised at any meeting which begins after the proxy is delivered. Proxies may be delivered to 7 St Petersgate, Stockport, SK1 1EB or by email to insolvency@bvllp.com In order to be counted a creditor's vote must be accompanied by a proof in respect of the creditor's claim (unless it has already been given). A vote will be disregarded if a creditor's proof in respect of their claim is not received by 4:00 pm on August 19, 2025 (unless the chair of the meeting is content to accept the proof later). A creditor who has opted out from receiving notices may nevertheless vote if the creditor provides a proof of debt in the requisite time frame. Proofs may be delivered to 7 St Petersgate, Stockport, SK1 1EB or via email to insolvency@bvllp.com Office Holder Details: Vincent A Simmons BV Corporate Recovery & Insolvency Services Limited 7 St Petersgate, Stockport Cheshire, SK1 1EB For further details contact: Vincent A Simmons Tel No: 0161 476 9000 Email: insolvency@bvllp.com Alternative contact: Julie Bridgett SLIM AT HOME: Quantuma Advisory Named as Administrators ------------------------------------------------------- Slim At Home Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales Insolvency & Companies List (ChD) Court Number: CR-2025-005249, and Michael Kiely and Andrew Andronikou of Quantuma Advisory Limited, were appointed as administrators on July 31, 2025. Slim At Home specialized in human health activities. Its registered office is at C/O Xeinadin First Floor Secure House, Lulworth Close, Chandler's Ford, SO53 3TL and it is in the process of being changed to 7th Floor, 20 St Andrew Street, London, EC4A 3AG. Its principal trading address is at Aviation Business Park, Enterprise Close, Christchurch, United Kingdom, BH23 6NX. The joint administrators can be reached at: Michael Kiely Andrew Andronikou Quantuma Advisory Limited 7th Floor, 20 St. Andrew Street London, EC4A 3AG For further details, contact: Darren McEvoy Tel No: 02038 566 720 Email: darren.mcevoy@quantuma.com STONEGATE PUB: Fitch Cuts IDR to 'CCC+' on Lower Expected Earnings ------------------------------------------------------------------ Fitch Ratings has downgraded Stonegate Pub Company Limited's Long-Term Issuer Default Rating (IDR) to 'CCC+' from 'B-', and Stonegate Pub Company Financing 2019 plc's senior secured debt rating to 'B' from 'B+' with a Recovery Rating of 'RR2'. The downgrade reflects lower expected earnings due to reduced profitability in the managed pubs estate due to cost pressures and fewer managed pubs. As a result, Fitch expects leverage and fixed charge coverage metrics that are inconsistent with a 'B-' rating. Fitch estimates the company will maintain sufficient liquidity despite weaker cash generation due to disposals and a partially undrawn revolving credit facility. The rating captures Stonegate group excluding Platinum portfolio of just over 1,000 leased and tenanted (L&T) pubs placed under the securitisation completed in 2024, expected to generate around GBP80 million EBITDA that Fitch deconsolidates from the group's earnings. Key Rating Drivers Business Mix Change; Forecast Lowered: Fitch has revised its EBITDA forecast for the restricted group down to GBP272 million for the financial year ending September 2025 (FY25) from GBP358 million previously. The revision is due to the decline in the number and lower profitability of managed pubs, which generate higher trading EBITDA/pub than L&T pubs, as well as higher central costs than its previous forecast. Fitch forecasts EBITDA to subsequently grow to slightly above GBP300 million, but this has some execution risk. The consolidated group reported adjusted EBITDA (post rents and central costs) nearly 6% down year-on-year in 1HFY25. Its forecast captures the group's ongoing cost saving efforts in relation to procurement, labour and central costs, which Fitch expects to offset cost inflation, combined with the conversion of less profitable managed pubs to other formats. Underperforming Managed Estate: Stonegate's managed estate has been underperforming due to operational cost challenges, mainly labour costs. The company has implemented drink price increases, but this has not helped compensate cost inflation. The impact of the latest National Living Wage increases and changes to National Insurance is not yet captured in 1HFY25. Stonegate reported a 19% decline in managed estate profits in 1HFY25. The negative like-for-like sales (-1% in 1HFY25) for the managed estate suggest that price increases are not fully offsetting volume decline. The performance of their weakest performing segment, late night bars, is potentially also due to more structural changes, but Fitch believes its performance at pubs is also affected by strong competition from the likes of JD Wetherspoon, which operates nearly 800 managed pubs and reports about 5% like-for-like sales growth, and subdued consumer confidence in the UK, remaining sensitive to affordability of drinking options. Reversal of Strategy: Stonegate has reversed its strategy of increasing the number of managed pubs to reducing their share by converting to other formats, mostly L&T pubs, given cost pressures and resulting weak earnings from the managed pub estate. The company is aiming to shrink its managed estate to 500 sites by FYE25, from 750 sites in FY23. So far, it has reported good results from conversions, with 27 managed pubs converted to other formats in 1HFY25, but there is meaningful execution risk on the remaining nearly 100 conversions in 2025 and any further potential conversions. Sharp Increase in Leverage: Fitch forecasts EBITDAR leverage of 9.0x at FYE25, which is above its previous expectation of 7.5x. Fitch does not expect leverage to revert to within 'B-'rating parameters (below 8.0x) over the rating horizon and this is reflected in the downgrade. Following the revision of its lease criteria, Fitch uses reported IFRS16 lease liability for Stonegate's leverage metric but this has not resulted in a material change in lease liability captured in the leverage calculation. Weak Coverage: Fitch expects weak fixed charge coverage at on average 1.2x over FY25-FY28 due to lower earnings. This is below its previous forecast of 1.4x. Fitch also expects weaker negative free cash flow (FCF) generation. Capex will be lower as L&T and operator-led models are less capital-intensive than the managed model, requiring lower conversion investment for each site, and remains partly funded by disposals (on average around GBP70 million per year) to support ongoing business needs. However, Fitch also notes disposals are subject to execution risk. More Stable L&T Portfolio: The L&T portfolio is generally more stable due to income from rents and drinks sales, with no exposure to labour cost inflation. It reported 5% site level EBITDA growth in 1HFY25 and conversions from managed are generating a healthy rise in profits. Restricted Group Excludes Platinum: Fitch deconsolidates the Platinum portfolio of just over 1,000 non-core L&T pubs placed under the new non-recourse securitisation funding in 2024. Fitch expects it to generate around GBP80 million EBITDA that Fitch deconsolidate from the group's forecast earnings. Fitch does not expect post-debt service operating cash flows from Platinum's securitisation put in place in 2024 to be upstreamed to Stonegate. Group reports include Platinum portfolio and earnings. Largest Pub Group: Stonegate is the largest pub group in the UK with about 3,300 pubs (excluding about 1,000 in Platinum group). Its size allows it to secure discounts with suppliers (brewers, SKY TV etc). The portfolio is split between L&T pubs (61%), managed pubs (21%) and operator-led pubs (18%). Stonegate pubs are mainly wet-led with only about 10% of turnover from food. Peer Analysis Stonegate's portfolio of 4,267 pubs (at March 2025) is significantly larger than Punch Pubs Group Limited's (B-/ Positive) 1,240 pubs, with both groups predominantly wet-led. Stonegate's scale enables central procurement discounts, which combined with larger average pub size, has driven higher profits per pub. However, this gap has narrowed, largely due to the underperformance of Stonegate's managed estate, where Punch has no exposure. Punch Pubs' one-notch higher rating reflects its around 1.5x lower EBITDAR leverage, trending to 7.0x by FYE26, and stronger coverage of around 1.8x compared with 1.2x for Stonegate. Stonegate is equally geographically diverse across the UK but has core-city and late-night formats that have been affected by reduced high street and late-night patronage. This has been compounded by rising labour and energy costs in its managed estate, which has driven a sharp decline in profits. Stonegate is now shifting strategy, moving back towards L&T operations, which are less exposed to operating cost pressures, but have lower profits. Stonegate's rating is aligned with UK-weighted Pizza Express (Wheel Bidco Limited, CCC+), both of which are affected by reduced customer volumes and significant cost inflation, driving uncertainty over the pace of EBITDA recovery. Stonegate, and pub groups generally, have higher debt capacity than Pizza Express due to their larger size and better financial and operational flexibility, given their freehold property, more limited exposure to labour costs and greater resilience to operating conditions. Key Assumptions Fitch's Key Assumptions within the Rating Case for the Issuer - Slightly lower trading EBITDA (pre-central costs) in FY25 with profit growth in L&T and operator-led offset by reduction in the managed estate due to the strategy change to reduce managed pubs and weaker performance due to cost challenges. Growth in trading EBITDA in FY26-FY28 from converting weaker performing managed sites to L&T and conversions to operator-led, somewhat offset by disposals - L&T EBITDA/pub (post rents) increasing from GBP81,000 (FY24) to near GBP100,000 by FY28 with the portfolio initially growing from just over 3,000 sites (including Platinum) from conversions from managed, then reducing from disposals and conversions to operator-led (to 2,800). This includes Platinum sites reducing from slightly above 1,000 to around 950 by FY28 - Managed EBITDA/pub (post rents) declining from GBP223,000 (FY24) to GBP200,000 in FY25 and improving to GBP330,000 in FY27 and GBP360,000 in FY28 on the back of a smaller portfolio consisting of more profitable sites - Operator-led EBITDA/pub (post rents) growing from near GBP150,000 (FY24-25) to near GBP180,000 in FY28 - Group central costs (including Platinum) of GBP120 million in FY25, reducing to GBP115 million in FY26 and GBP110 million in FY27 thanks to cost reduction actions, before growing in FY28 - Deconsolidation of Platinum EBITDA, which is assumed to grow from GBP78 million pro forma in FY24 by on average nearly 3% per year - Recurring pub disposals (excluding Platinum) of around GBP70 million on average in FY25-FY28 from disposing on average 125 sites a year (150 sites in FY27-FY28) - Capex (excluding Platinum) totals GBP115 million a year, including maintenance and conversion capex. For conversions Fitch models limited 10 sites from L&T to operator-led from FY27 - Broadly neutral working capital - No external dividends - Holdco payment-in-kind facility of GBP325 million treated as non-debt Recovery Analysis Fitch's recovery analysis assumes that Stonegate would be liquidated rather than restructured as a going concern in a default. Recoveries are based on the property values of the consolidated group's pub assets, although bondholders' security is a pledge over the equity shares in group entities. Its liquidation approach uses FYE24 valuations of the group's freehold and long leasehold assets, and Fitch adjusts for disposals made in 1HFY25. Fitch applies a 25% discount to these pub valuations, comparable with the 25% stress experienced by industry peers during 2007 to 2011, on an EBITDA/pub basis, replicating the 'fair maintainable trade' component of pub valuations. Fitch has excluded the Platinum pub assets as they have their own Apollo non-restricted group secured financing. Unique's securitisation is under-leveraged. Stonegate has significant incentives to retain Unique's residual value after deducting its secured debt of about GBP190 million and fully drawn debt service facility of GBP12 million. Including the discount on the real estate, the amount Fitch assumes available to Stonegate creditors is around GBP1.2 billion, plus GBP1 billion from the attributable residual values primarily from Unique. After deducting a standard 10% for administrative claims, Fitch has assumed that Stonegate's super-senior revolving credit facility and overdraft totaling GBP273 million would be fully drawn in a default. Fitch assumes the senior secured first-lien notes of around GBP2.1 billion rank behind the revolving credit facility but ahead of second-lien debt of GBP156 million. Fitch's principal waterfall analysis generates a ranked recovery for senior secured first-lien notes of 'RR2', indicating a two-notch uplift for this class of instrument above the IDR. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Weaker-than expected operating performance due to macro-economic environment impacting consumer behaviours, competitive pressures or execution risks leading to inability to lift earnings or consistently negative FCF (after disposals) - Deterioration in expected available liquidity, leading to heightened refinancing risks - EBITDAR fixed-charge coverage below 1.0x - Leverage not trending towards 8.5x Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Stronger than forecast performance with EBITDA reaching GBP350 million - EBITDAR leverage below 8.0x - EBITDAR fixed-charge coverage above 1.3x - FCF trending to neutral - Adequate liquidity that is not diminishing Liquidity and Debt Structure Stonegate reported GBP103 million cash at mid-April 2025. Of this, GBP61 million relates to the restricted group, which combined with GBP150 million available under the committed, undrawn revolving credit facility (GBP248 million limit) provides satisfactory available liquidity of GBP211 million. Fitch expects negative FCF, in part due to around GBP115 million capex to be partly offset by disposals (about GBP70 million on average), and for overall liquidity position to decline in the first two years. Stonegate does not have debt maturities before 2029. Issuer Profile Stonegate is a private equity (TDR) owned, largest UK pub group with a total of about 3,200 pubs in the restricted group spread across three different business models. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Stonegate Pub Company Financing 2019 Plc senior secured LT B Downgrade RR2 B+ Stonegate Pub Company Limited LT IDR CCC+ Downgrade B- TALKTALK TELECOM: Fitch Lowers IDR to CCC- & Puts on Watch Negative ------------------------------------------------------------------- Fitch Ratings has downgraded TalkTalk Telecom Group Limited's (TTG) Long-Term Issuer Default Rating (IDR) to 'CCC-' from 'CCC'. Fitch has also downgraded TTG's first-lien senior secured debt ratings to 'CCC' from 'B-', and second-lien ratings to 'C' from 'CC', with Recovery Ratings of 'RR3' and 'RR6', respectively. The IDR and first-lien rating have been placed on Rating Watch Negative (RWN). The rating actions follow TTG's proposed exchange transaction on its existing debt. This follows a consent solicitation process that concluded on 6 August with agreements received. Fitch believes the proposed debt restructuring will result in a material reduction in terms for creditors and is being conducted to avoid potential insolvency, given TTG's weak liquidity position and unsustainable capital structure. The transaction meets the conditions for a distressed debt exchange (DDE) under Fitch's Corporate Rating Criteria. The RWN reflects the pending exchange to be launched in coming weeks. Fitch will continue to evaluate TTG on its existing capital structure until the transaction completes. Key Rating Drivers Restructuring Proposal, Likely DDE: The proposed debt exchange includes a GBP120 million payment-in-kind (PIK) facility, backstopped by a shareholder, with GBP60 million of cash already received on an interim first-lien basis. First- and second-lien lenders will be able to participate in the facility. The facility will rank at 1.5 lien on transaction completion. Second-lien lenders that contribute to funding will be elevated above existing second-lien lenders. First-lien lenders will have an option to exchange into up-tiered notes, retaining their position, but with PIK-only interest and extended maturity to February 2028. Fitch are likely to assess the transaction, as proposed, as a DDE under its criteria, due to a material reduction in terms with respect to interest, maturities and ranking. Non-consenting lenders will rank behind the new funding and be covenant stripped, achieved with a simple majority vote. Fitch believes creditors had limited alternative than to support the proposal given the current liquidity trajectory heightens the risk of a default. Under its criteria, Fitch downgrades a company's IDR to 'C' once a DDE is signed with a confirmed exchange date. Liquidity Under Pressure: TTG reported balance-sheet cash of GBP23 million for the first quarter of the financial year ending February 2026 (FY26), with no revolving credit facility to cover short-term working capital needs. Fitch expects the new funding, in addition to asset sales, to improve TTG's immediate liquidity position, based on asset sales already completed, including any contingent payments. The GBP60 million is available immediately and additional funding will be available on a short-term basis in March 2026. The cash injection will be used to renegotiate terms with key suppliers and allow for an exit on agreements no longer required with suppliers. Negative FCF: Fitch projects TTG's capital structure will result in negative free cash flow (FCF) over FY26-FY28, leading to a substantial erosion of liquidity. This will be exacerbated by cash interest payments starting in May 2026. Near-term cash outflow is strained by restructuring costs and high capex. TTG has cut operating and subscriber acquisition expenses, but this has been offset by continued revenue decline, limiting FCF improvement. Underlying earnings generation is weak, with a FY25 Fitch-defined EBITDA margin of 4.5%. TTG reached the required first-lien consents for the incremental facility and amendment of terms to convert to PIK at the close of the exchange offer. Unsustainable Capital Structure: TTG's leverage is no longer commensurate with a 'CCC' rating, as evidenced by its extremely high Fitch-defined EBITDA leverage and the lack of a credible deleveraging pathway. Fitch expects only marginal Fitch-defined EBITDA margin improvements over FY26-FY29, leaving leverage high for TTG's business profile for a prolonged period. The company's capital structure remains untenable in the absence of comprehensive balance-sheet restructuring, posing significant risk to creditors. Refinancing risk is also heightened, with PIK interest accumulating to the debt balance. Ongoing Operational Challenges: TTG continues to face operational challenges. Its customer base dropped to 3.05 million in 1Q26, from 3.60 million, partly due to the disposal of part of its customer base. The business is also exposed to the continued decline of legacy products, including voice and lower bandwidth ethernet, as well as intensifying competition from alternative networks. TTG's PXC ethernet business experienced marginal growth of 1.3% in FY25, which brought some value, but was constrained by front-book pricing pressure. Business Model Risks: TTG operates as an aggregator and reseller in an increasingly competitive market, where declining inflation and limited pricing flexibility have made it difficult to sustain earnings growth. The company still holds a major position in the sector, but its market share has fallen to below 10%, reflecting a rapidly shrinking customer base. Initiatives to restructure operations, including the separation of TTG Consumer and PXC, have yet to demonstrate meaningful progress. Execution risk around cost transformation and operational turnaround remains elevated, with aggressive cuts in subscriber acquisition costs and marketing potentially compromising growth. Peer Analysis TTG's operating and FCF margins lag the telecom sector average, reflecting its limited scale, unbundled local exchange network architecture and dependence on regulated wholesale products for last-mile connectivity. The company is less exposed to the trend of consumers trading down or cancelling pay-TV subscriptions in favour of alternative internet or wireless-based services, but its business model faces weaker operating margins from its leased local network, intense competition at the value-end of the market and evolving regulation. Peers, such as BT Group plc (BBB/Stable) and VMED O2 UK Limited (BB-/Negative), benefit from fully owned access infrastructure, revenue diversification as a result of scale in multiple products, including mobile and pay-TV, and higher operating and cash flow margins. A notable peer in the UK value segment is Vodafone Group Plc's (BBB/Positive) UK-based subsidiary, which also leases lines from Openreach - BT's wholly owned network operator - and alternative networks. However, Vodafone benefits from global diversification, network ownership in other countries and an extensive mobile network that allows for fixed-mobile convergent offering. Sky plc, a subsidiary of Comcast Corp. (A-/Stable), is another leased line provider, but benefits from scale and service diversification, with offerings at the premium and value-end (NowTV). It also has a significant competitive advantage in the cash flow-generative traditional pay-TV segment, particularly through its higher-value sport offerings. The higher cash flow visibility of these peers supports greater debt capacity for a given rating. Key Assumptions Its rating-case assumptions reflect the current capital structure: - Revenue decline of 9% in FY26, with steady low single-digit growth over FY27-FY29 - Fitch-defined EBITDA margin of about 5.6% in FY26, rising gradually to above 7.0% by FY29. Fitch-defined EBITDA is on a pre-IFRS16 basis - Network monetisation cash inflow recognised before FCF, but excluded from Fitch-defined EBITDA - Capex/sales of 6.8% in FY26, declining to 5.0% by FY29 - Non-recurring cash outflow includes copper-to-fibre, legacy and exceptional costs - M&A cash inflow of GBP50 million, including contingent payments reflecting disposals already signed - Interest on first-lien senior secured debt treated as cash paid from FY27, in line with the existing indenture - GBP60 million included in gross debt on a PIK basis Recovery Analysis The recovery analysis assumes TTG would be considered a going concern in bankruptcy and that it would be reorganised rather than liquidated. Post-restructuring, TTG may be acquired by a larger company that could absorb its customer base and exit or cut back its presence in less favourable service lines, ultimately reducing its scale. Fitch estimates a post-restructuring EBITDA of around GBP110 million. Fitch applies an enterprise value multiple of 4.0x to going concern EBITDA and deduct 10% for administrative claims to account for bankruptcy and associated costs to calculate a post-reorganisation enterprise value of GBP396 million. The multiple reflects TTG's smaller scale, limited diversification and restricted network ownership compared with that of peers in developed markets. Its waterfall analysis generates a ranked recovery for TTG's first-lien senior secured debt in the 'CCC'/'RR3' band. Fitch treats the new funding as equally ranking to other first-lien debt on an interim basis. Second-lien senior secured debt lies in the 'C'/'RR6' band. Fitch assumes the accounts receivable securitisation facility remains in place in a bankruptcy and therefore does not affect recoveries for secured creditors, as demonstrated in the most recent restructuring in December 2024. Its analysis reflects the current capital structure. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Fitch will resolve the RWN and downgrade the IDR to 'C' on confirmation that an agreed exchange will take place and a date for it has been set. - Fitch will downgrade the Long-Term IDR to 'RD' (Restricted Default) on completion of the transaction and subsequently re-rate the company. - Non-payment of any financial obligations or an uncured covenant breach under the current capital structure. Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Fitch does not expect positive rating action until after the IDR is downgraded to 'RD' when the DDE is executed or if TTG can improve its liquidity position without needing to undertake a DDE. Liquidity and Debt Structure Fitch sees minimal liquidity headroom for TTG to weather further operational underperformance. The incremental facility of GBP120 million, with GBP60 million drawn immediately, and proceeds from executed asset sales will help with near-term supplier payments and provide TTG with additional flexibility in managing ongoing supplier negotiations. Cash interest payments are due to start in May 2026. However, TTG reached the necessary first lien creditor consents to amend interest payments. Any reversal of the proposed restructuring plan without an appropriate alternative solution would likely lead to a significant erosion in balance sheet liquidity. TTG's debt was split into first- and second-lien senior secured debt, including PIK interest, of GBP674 million and GBP595 million, respectively, as of 1QFY26. New funding will also have PIK interest and matures in February 2028. Current maturities for the senior secured debt are September 2027 and March 2028. Issuer Profile TTG is a 'value-for-money' fixed-line telecom operator in the UK, offering quad-play services to consumers and broadband and ethernet services to business customers. Summary of Financial Adjustments TTG classifies customer connection costs as right of use assets, which it depreciates under IFRS16. However, these are paid upfront as part of capex, leaving lease cash repayments lower than depreciation of right of use assets plus interest on lease liabilities (IFRS16 lease costs). According to its criteria, IFRS16 lease costs should be deducted from operating profit to calculate Fitch-defined EBITDA for this sector. Fitch treats the customer connection element of lease costs as capex and lower IFRS16 lease costs for the portion of lease costs that relate to one-off customer connection costs. Sources of Information MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- TalkTalk Telecom Group Limited LT IDR CCC- Downgrade CCC senior secured LT CCC Downgrade RR3 B- Senior Secured 2nd Lien LT C Downgrade RR6 CC VUE ENTERTAINMENT: Moody's Affirms 'Caa2' CFR, Outlook Now Stable ----------------------------------------------------------------- Moody's Ratings affirmed the Caa2 corporate family rating of Vue Entertainment International Limited (Vue), along with its Caa2-PD probability of default rating. Moody's also affirmed Vue's EUR63.7 million senior secured term loan (new money facility) and EUR94.8 million super senior secured term loan at B3, EUR127.4 million 1.5 lien senior secured term loan at Caa2 and EUR227.4 million senior secured term loan at Caa3. The outlook has been changed to stable from negative. RATING RATIONALE The change in outlook to stable from negative as part of the rating action reflects improving conditions in the cinema industry and strengthening of Vue's performance as a result. In the first half of 2025, Vue's total revenue grew relative to the same period a year earlier by 14%, while its average ticket price (ATP) and concession sales per patron (SPP) grew by 3% and 8% in Q2 2025, respectively. This reflects the stronger film slate in the aftermath of the writers' and actors' strike including Wicked and A Minecraft Movie in the first half of 2025. The affirmation of the Caa2 CFR reflects Vue's still stretched credit metrics with leverage that Moody's expects to remain elevated at 7.5x for 2025 (measured as debt/EBITDA on a Moody's-adjusted basis), low interest coverage at 0.6x (measured as EBITA/interest) and free cash flow close to breakeven. With the PIK feature on the new money and reinstated facilities scheduled to expire in Q1 26, there is a high risk of additional debt restructuring that could result in losses to creditors, which is reflected in the Caa2 CFR. Vue's Caa2 CFR also reflects its geographically diverse portfolio, a strong presence in Europe that enables a higher percentage of local content, thereby reducing dependence on studio releases, and the crucial role cinemas play within the film studios' distribution network. These credit strengths are offset by Vue's significant fixed costs tied to lease obligations, decreased demand from moviegoers due to competition from more cost-effective streaming services, the unpredictable nature of box office success reliant on the timing of studio releases, widespread audience appeal, as well as consistently weak credit metrics, albeit improving somewhat in 2025. LIQUIDITY Vue's liquidity is adequate with GBP104 million of cash at the end of Q2 2025 and no debt maturities until 2027. Still, the company faces material cash outflows including its interest and lease expenses, capital outlays and the expiration of the PIK feature on its new money reinstated facilities in Q1 2026. STRUCTURAL CHARACTERISTICS Vue's new money super senior facility is rated B3 reflecting its senior-most position in the capital structure. The reinstated 1.5 lien senior secured facility is rated Caa2, at the same level as the CFR, and reinstated senior secured facility is rated Caa3, reflecting their respectively more junior positions in Vue's capital structure. RATING OUTLOOK The stable outlook reflects Moody's expectations that Vue's credit profile will continue to strengthen in 2025 while its liquidity remains adequate. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could upgrade the rating on the back of consistent release of studio content and sustained film-goers' demand such that Vue's operating profitability improves steadily. Also, progress towards more sustainable capital structure and improved interest coverage would also be needed for an upgrade. Moody's could downgrade the rating if the company's liquidity deteriorates over the next 12-18 months increasing the likelihood of further debt restructuring and larger losses to creditors. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement. Vue Entertainment International Limited is a leading international cinema operator, managing well-known brands in major European markets, and is the third-largest European cinema operator by the number of screens. The company, originally founded in 1998, has grown through a number of acquisitions. As of May 31, 2025, the company operated 222 cinemas and 1,951 screens across the UK, Ireland, Germany, Denmark, Poland, Italy, the Netherlands, and Lithuania. In fiscal 2024, the company reported revenue of GBP738 million and a company adjusted EBITDA (after rental expense) of GBP27.5 million. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2025. 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